Network Fees

Cumulative Ethereum Transaction Fees in 2020 Supersede Bitcoin’s by a Long Shot

30/09/2020 by Idelto Editor

This week the research and analysis team Coin Metrics published a report on how decentralized finance (defi) is “fueling Ethereum’s growth.” Meanwhile, the researchers also highlighted that Ethereum’s cumulative transaction fees in 2020 are now over $350 million and more than double the aggregated total of Bitcoin’s network fees.

Coin Metrics researchers and Nate Maddrey published a new report that discusses Ethereum’s defi evolution and the growth the blockchain has seen this year. However, with the new demand Coin Metrics highlights that ETH fees have “changed dramatically” and the authors note “high gas prices are becoming the new norm.”

A few defi project launches contributed to the dramatic rise in network fees including UNI, SUSHI, YAM, and YFI. The trading of the new tokens has been more prevalent on decentralized exchange (dex) platforms and because swaps are onchain this created a fee market. “This can lead to escalating transaction fees as users compete to be first in line for a trade,” the report emphasizes.

“ETH median transaction fee hit a new all-time high of $8.25 on September 2nd following the launch of SUSHI,” the study’s author adds.

On Twitter, the Coin Metric’s team published a chart that shows Ethereum network fees this year are double the size of BTC’s 2020 fees. “Ethereum Total Transaction Fees during 2020 are now over $350m and more than twice Bitcoin’s,” the team’s Twitter account wrote. “By comparison, this time last year, cumulative Bitcoin Transaction Fees were $135M and Ethereum Transaction Fees were $27M,” the researchers added.

The report says that distributed ledger network fees are a “double-edged sword.” Essentially users are paying higher fees but miners are gathering all the revenue and in turn, the hashrate has increased exponentially. “As a result, Ethereum’s hash rate is climbing towards all-time highs— This is a good sign for Ethereum, as network security is critical for the long-term health and success of the blockchain.”

Although, the researchers underline that higher gas fees can make the ETH chain “prohibitively expensive” for a certain fraction of users. This can tip the scales for Ethereum whales who can swap large sums of tokens while smaller players could face a barrier to entry. “Ethereum’s median transfer value has increased to hundreds of dollars since the rise of defi, signalling that the network is shifting towards larger players,” the report points out.

What do you think about Ethereum fees growing double the size of Bitcoin’s network fees in 2020? Let us know what you think in the comments section below.

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Ethereum’s Gas Spike Forces Coinbase Pro to Pass Network Fees to Customers

19/09/2020 by Idelto Editor

While Ethereum network fees have jumped to new highs this year, the popular cryptocurrency exchange, Coinbase Pro, announced that the trading platform would be passing network fees onto customers. The move followed the exchange listing Uniswap’s native token UNI, an airdrop that saw miners collect close to $1 million in gas in less than an hour.

The decentralized finance (defi) ecosystem has seen significant demand in 2020, but it has also contributed to the Ethereum (ETH) network’s rising fees. Ethereum miners are collecting a massive amount of revenue from gas payments, as miners are capturing between $700k to $850k per hour or 700 gwei per transaction.

ETH fees have touched an all-time high in 2020 and defi lending applications, yield farming, and decentralized exchange swaps (dex) have bolstered high fees.

The centralized exchange (cex), Coinbase Pro announced on Thursday that network fees will now be passed down directly to their customers.

“Starting today, Coinbase Pro will pass along network fees directly to our customers,” the exchange tweeted. “These fees (sometimes referred to as “gas fees” on the ETH blockchain) are paid directly to crypto miners that process transactions and secure the respective network,” the San Francisco-based exchange further added.

Meanwhile, on social media, a number of people got upset about the announcement, while others said that alternative blockchain networks were more beneficial. “Once again, this showcases the use case for low fee transaction blockchains like Bitcoin Cash (BCH),” the BCH proponent David Shares tweeted to Coinbase Pro in response to the fee announcement.

A few other individuals expected the move and said that any profitable company would do the same.

“A lot of people seem upset at this but it just makes sense to me,” one individual wrote. Transactions are actually getting expensive now and they’re running a business so that’s why they have to up their prices.”

Coinbase Pro detailed that in the past, the San Francisco firm absorbed the network fees for the customer. “Historically, Coinbase Pro has absorbed these fees on behalf of our customers. However, as crypto has begun to gain broader adoption in applications like defi, payments, and other projects, networks have gotten busier,” the company’s followup tweet said.

Additionally, Coinbase detailed that the company does not charge people for transferring funds between two different Coinbase accounts. “To ensure a smooth experience for our customers and reasonable transaction processing times, Coinbase Pro will charge a fee based on our estimate of the network transaction fees that we anticipate paying for each transaction,” the company concluded.

What do you think about Coinbase Pro passing on network fees to customers? Let us know what you think about this subject in the comments section below.

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Ethereum’s 2020 Defi Boom Doubles Active Ether Addresses, But Fees Skyrocket

22/07/2020 by Idelto Editor

The number of active Ethereum addresses has grown aggressively in 2020 because of the decentralized finance (defi) boom. Active Ethereum addresses doubled in size leaving networks like Tron, Cardano, and EOS in the dust.

There’s a lot happening in the world of decentralized finance (defi) with things like synthetic bitcoin (WBTC), stablecoins, yield farming, decentralized exchange (dex) platforms, and more crafted on the Ethereum network. Since the end of 2019, data from Coin Metrics and Messari.io indicates that Ethereum addresses doubled in size throughout the year.

Active ETH addresses have superseded BTC active addresses by a long shot and this has been sparked by 2020’s defi bonanza. Additionally, decentralized exchange (dex) trade volumes have touched $1.6 billion this month and there were $160 million in dex swaps during the last 24 hours. The top three platforms today as far as the most exchange volume today include Curve, Balancer, and Dydx according to Dune Analytics.

Data also shows the number of ETH-based smart contract platform active addresses has outpaced other Ethereum competitors. Coins like TRX, EOS, ADA, and XTZ have been eclipsed. However, Messari researcher Wilson Withiam tweeted about the defi situation and Ethereum’s smart contract war competitors.

“In the last year, thirteen Ethereum competitors have raked in over $300 million combined,” Withiam said. “Almost all were valued well north of $100 million.”

Ethereum is also seeing a significant amount of stablecoin use between all the ERC20-based stablecoins buzzing around the network. One of the biggest ETH-based smart contracts is the most popular stablecoin in the world, tether (USDT). According to Etherscan stats, there’s a whopping 6,037,847,550 USDTs in circulation using the ERC20 standard.

Moreover, the great number of other stablecoin projects in existence like Dai (DAI), Usd coin (USDC), Trueusd (TUSD), and Pax standard (PAX) are all ERC20 tokens. Ethereum is also doing some heavy lifting for the BTC chain and acting as a fluid sidechain. There is $114 million total-value-locked (TVL) in the ERC20 token called WBTC that is backed 1:1 by bitcoin (BTC). Other chains like renBTC and sBTC are moving synthetic BTC on the Ethereum chain as well.

All of this action taking place in the Ethereum ecosystem has developed a large number of active Ethereum addresses but there have been a number of issues. The fees needed to interact with an ERC20 smart contract has been high and cryptocurrency proponents have been complaining about the issue regularly.

For instance, it cost over $4 and 100 MANA to register a name (interact with a smart contract using Metamask) on Decentraland on July 21, 2020. Fees have been a significant nuisance to Ethereum users yield farming and interacting with defi as some gas fees have reached 100 gwei.

Ethereum’s cofounder Vitalik Buterin said on Tuesday that the transaction fee revenue could possibly undermine the chain’s security.

“Transaction fee revenue is now nearing half as high as block reward revenue,” Buterin tweeted. “This actually risks making ethereum *less* secure because of fee market reform (ie. EIP 1559) fixes this; another reason why that EIP is important.”

Additionally, the management team behind Maker and the Compound project community have been at odds lately as gainful DAI yield on Compound has created stability issues for the stablecoin DAI. The discussion has been very topical for individuals like Cyrus Younessi, the Head of Risk at the Maker project.

Another controversial discussion in regard to stablecoin use on the Ethereum chain is the fact that a number of stablecoin addresses from USDT and USDC have been frozen. A number of skeptics believe that the ability to blacklist a token via an Ethereum smart contract threatens defi and puts the term “decentralized finance” into question.

What do you think about Ethereum’s active addresses doubling in 2020? Let us know what you think about this subject in the comments section below.

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Nightmare Come True: User Pays $2.6 Million in Transaction Fees to Send $134 of Ether

10/06/2020 by Idelto Editor

Nightmare Come True: User Pays $2.6 Million Transaction Fees to Send $134 of Ether

A record ethereum transaction fee has been paid today: $2.6 million to transfer $134.

The user probably mixed up the fields on the value of the transfer and the fee, eventually paying 10,668 ETH in fees, or $2.6 million, on a transaction mined by Sparkpool.

A nightmare come true, the customer sent 0.55 ether, worth $133.95, according to a record of transactions broadcast on the Ethereum (ETH) network. The money was sent to an address on the South Korean crypto exchange Bithumb.

The funds may be lost forever. Most blockchains are built to prevent transactions from being reversed once the sender confirms it.

Moreover, the fee may have since been distributed to the different miners under Sparkpool as a reward for processing transactions.

Sparkpool said in a tweet on June 10: “We are further investigating the incident of unusually high tx fee…There will be a solution in the end.”

The Chinese miner has previously repaid a user half of the 2,100 ETH accidentally paid as fees in a 0.1 ether transfer.

There is suspicion of underhand dealing, with some members of the Ethereum community alleging manipulation of the transaction by Sparkpool, or that it was an attempt at evading tax, or money laundering.

In general, the average ETH transaction fee is up more than 637% since January, as the network became congested due to a high number of transactions passing through it.

Transactional errors are not uncommon in the crypto industry, but they don’t often come as big as the latest ether gaffe. In 2017, someone paid 50 bitcoin (BTC) in transaction fees to send just under 10 BTC.

Some analysts suggest that blockchain networks should be able to reject transactions if the fee exceeds the average highest fees of the previous 10 blocks mined, just in the same way, say, the Bitcoin blockchain rejects fees that are too low.

What do you think about errors in cryptocurrency transactions? Let us know in the comments section below.

The post Nightmare Come True: User Pays $2.6 Million in Transaction Fees to Send $134 of Ether appeared first on Bitcoin News.

A Number of Hong Kong Vending Machines Support Bitcoin Cash Payments Over BTC

04/06/2020 by Idelto Editor

Just recently, cryptocurrency evangelist Roger Ver shared a video on Twitter that shows a number of vending machines in Hong Kong that accept bitcoin cash and ethereum, but not bitcoin. A bunch of people got upset at the Tweet, including the crypto-pundit Tone Vays because they couldn’t deal with the fact that onchain bitcoin transactions could not provide such services. The reason bitcoin cash is supported by these vending machines in Hong Kong is because bitcoin transaction fees are 1,931x more expensive than bitcoin cash transactions.

Hong Kong Vending Machines Choose Ethereum and Bitcoin Cash

For years now the concept of leveraging cryptocurrencies with vending machines has been a popular trend because the two ideas go hand in hand. In the early days, when bitcoin (BTC) fees were cheaper, vending machines that utilized BTC were gathering steam. News.Bitcoin.com reported on the subject back in 2016, just before BTC fees skyrocketed to $50+ per transaction at the end of 2017. The network clog and higher fees have made it so bitcoin vending machines are not realistic if they are powered by BTC transactions. There have been a few Lightning Network-powered vending and candy machines, but the Lightning Network is riddled with issues like failed transactions and a myriad of other vulnerabilities. Hardcore BTC maximalists don’t like to admit it, but in a much shorter period of time, the Ethereum blockchain handles more BTC-based offchain transactions by a long shot.

Why do these HK vending machines accept #BitcoinCash and #Ethereum but not #Bitcoin? pic.twitter.com/NosqL8ZVgP

— Roger Ver (@rogerkver) May 29, 2020

Just recently, the well known digital currency investor, Roger Ver, tweeted about a few vending machines in Hong Kong that only accept ETH and BCH. “Why do these Hong Kong vending machines accept bitcoin cash and ethereum but not bitcoin?” Ver asked his Twitter followers. The reason why cryptocurrency vending machines cannot use BTC is because it is currently 1,931.56x more expensive to transact on Bitcoin (BTC) in USD,” according to Coin Dance statistics. So let’s just say a candy bar or can of soda in the machine costs $1, and according to Billfodl’s BTC fees web portal the average transaction will cost a user between $1.23 or $1.72 per transaction. So that dollar soda would cost a person a minimum of $2.23 for an 8oz can of cola, and anyone with some brain cells knows that’s not sustainable for vending machine operations.

Maximalists Dismiss Facts, Bitcoin Network Fees Crippled a Number of Concepts

Despite the facts, the Youtuber and crypto-pundit Tone Vays busted out a logical fallacy and said: “Because you probably paid for that feature of the machine.” Vays then switched goalposts, and said that the real question was “how many transactions have they processed since that demo.” Vays didn’t get into the fact that leveraging BTC is not sustainable to run a vending machine with dynamic and unreliable transaction fees. Vays forgot to mention that vending machines are not the only projects BTC’s high fees have neutered. Bitcoin cash fees are always low and less than a U.S. penny per transaction. BCH fees even remained that way in September 2018, when the BCH chain processed 2.4 million transactions in 24-hours.

Vays and the other people who decided to dismiss simple facts, didn’t mention that coin tumbling and coinjoin applications are much harder when BTC fees are so high. A number of mixers and tumbling services that operated in the early days are hardly used these days because of BTC high network fees. On the other hand, BCH fees are super low and have allowed for projects like Cashshuffle and Cashfusion to thrive. Both of these applications continue to allow people to shuffle millions of dollars because of low transaction fees. Let’s not forget that BCH developers pioneered Cashfusion and even BTC proponents are beginning to understand it offers more privacy than traditional coinjoin practices.

The Replace-by-Fee Vulnerability and No One Wants to Use Bitcoin for Color Coin Projects These Days

Critics of Ver’s tweet forgot to mention all the great companies that dropped BTC because of expensive and unreliable transactions. Well known companies like Fiverr, Expedia, Reddit, Steam, Stripe, Paypal, and Dell all dropped BTC support over the last few years. People on the vending machine thread on Twitter did discuss zero-confirmation transactions and how BCH benefits from them. Of course, maximalists claim that zero-confirmation transactions are “unsafe,” but the chances of them being unsafe are extremely minimal. However, as far as BTC is concerned the software called replace-by-fee (RBF) is not safe for zero-confirmation transactions and double spending can happen with any amount of funds on the BTC network using RBF.

Unfortunately, people forget that even color coins (tokens) were eclipsed from the BTC chain too for the most part because of fees. This reasoning alone is likely why Tether has moved most USDT over to other blockchains instead of relying on Omni. Ethereum is BTC’s sidechain because projects like Wrapped Bitcoin (WBTC) have outperformed the Lightning Network.

High transaction fees and network congestion has done a lot of damage to certain ideas like micropayments as well. If you cannot purchase a $1 soda in a reasonable manner, sending micropayments of $0.10 to $0.25 is even worse. The real reason the vending machines in Hong Kong accept bitcoin cash and ethereum is because it is not sustainable to run a vending operation with BTC’s expensive and unreliable transaction fees. No more no less.

What do you think about the response to Roger Ver’s tweet? Let us know in the comments section below.

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