A look at the top 30 dApps on Ethereum confirms that all but one decentralized applications (dApps) are finance based. The high GAS fee is acting as barriers to entry and growth for other applications such as games, service management, NFTs and so on.
Ethereum Fees Dilemma
The average fees on Ethereum is currently at All-Time High (ATH) levels. Co-incidentally, high fees on Bitcoin and Ethereum seems to be characteristic of bull markets. However, the rise in Ethereum fees is particularly striking as it reaches above $5. While Bitcoin [BTC] fees are at par with the 2019 bull market, Ethereum’s has risen to 2017 peak levels. This is concerning to the market. However, the increasing utility on DeFi platforms is unprecedented and is not getting affected by fees.
Presently, the miners are making more from fees than block rewards at the time. This is also bullish for Ethereum as the tendency to hodl increases among miners.
Even the growth of USD Tether on Ethereum remains unaffected by the fees as the volume of transactions is increasing continually. USDT on Ethereum accounts for the majority of the assets on Tether; above 66% of the 12.990 billion USDT.
DeFi Hogging Block-space
Ethereum devs. are currently pursuing the ‘world computer’ narration for Ethereum. However, due to the rise in fees, the applications are now waiting to be validated on the network for a longer time and cost. The only services who are going to agree with such high fees are financial applications offering hefty returns. Leading crypto analyst and market researcher for Deribit Exchange, Hasu, told us,
…applications have to compete for scarce blockspace in an open market, the outcome is what many people have suspected for a long time. namely that only financial usecases can survive
He suspects that outcome will be the survival of financial applications only. Moreover, the gains in the DeFi space are currently far too abnormal and are expected to normalize in the future. During such an adjustment, the fees must also fall equivalently to support the long-term sustainability of these dApps.
If not world computer, Which narrative of Ethereum is likely to become the future? Please share your views with us.