While cryptocurrency holders continue to provide liquidity in the decentralized finance (DeFi) market, the Ethereum gas fee remains relatively stable.
In fact, fees are lower than ever and have reached a level previously seen at the start of August. However, low fees may indicate that users may stop participating in DeFi soon.
According to data from Livdir, gas fees on the Ethereum network reached an all-time low on a monthly level. Currently, fees range anywhere between 20 and 40 gwei per transaction. Fees have consistently fallen since a peak of 600 Gwei in September, following the Uniswap UNI airdrop.
As the monthly chart shows, the Ethereum network had three major spikes since June. The first spike occurred on August 13 when the leading altcoin rallied along with Bitcoin to old highs, reaching 300 gwei.
The second spike was even higher, reaching up to 470 gwei per transaction. This spike happened as a result of SushiSwap’s launch, a yield farming platform highly popular at the time.
Last but not least, the network experienced another significant rise in gas fees on September 17. This was the largest spike in 2020 and resulted in exorbitant fees. At 600 gwei per transaction, users had to spend between $50 to $100 for a single transfer. The reason behind the spike was Uniswap’s new governance token which was distributed to all of its community members.
Ever since the last spike, the network slowed down. Gas fees have been reduced from 100 gwei in September to 30 gwei on average at the time of writing.
If another significant event causes DeFi to grow, we may yet again see expensive transactions. However, the market seems to have slowed down. According to DeFi Pulse, the market is unable to break resistance at $11.2 billion in collateralized assets.
ETH 2.0 may scale DeFi from December
As Defiye previously reported, the number of active addresses has plunged in October. Since there are fewer transactions conducted on the Ethereum network, gas fees have dropped as well. Similarly, the DeFi market reached an obvious top as users are scared to yield farm due to intensive market movements.
This may also be a result of a lack of scalability. In August and September, Ethereum reached high network congestion levels that caused a gas fee surge. However, the situation may soon flip as Ethereum developers plan to launch ETH 2.0 later this year.
As we wrote earlier, Ethereum co-founder Vitalik Buterin recently tweeted that the gas fee on networks may soon become up to 10 times cheaper. The ambitious developers seek to launch the first phase of the upgraded and new ETH 2.0 network.
Announcements have revealed that Phase 0 will be launched in December 2020. The new network upgrade will create the genesis block as soon as users stake 524,288 ETH.
The first phase will launch ETH 2.0 alongside the main network. Users will not be able to utilize the upgrade since ETH 1.0 will still handle all transactions and activities. The new version will only replace the old network after Phase 1.5, announced for December 2021.