- Fees on the Ethereum blockchain have spiked to the highest levels since 2021 due to increased activity and congestion from meme coin trading
- High gas fees make Ethereum unusable for many regular users right now, as small transactions are priced out
- The frenzied activity is accelerating ETH token burning, which puts deflationary pressure on supply and supports ETH prices
The massive spike in activity and transactions on the Ethereum blockchain has driven fees to levels not seen since 2021. While this benefits ETH by accelerating token burning, it also makes using Ethereum prohibitively expensive for many users.
Surging Gas Fees Make Ethereum Unusable for Some
According to analysis from IntoTheBlock, the average Ethereum gas fee recently exceeded $50 per transaction. This is the highest level since summer 2021, when NFT and DeFi manias pushed fees to all-time highs.
The analysts attribute the current surge to increased activity around meme coins like Dogecoin, Shiba Inu, and Floki Inu. The frenzy of trading and speculation around these tokens has congested the network and driven up transaction costs.
While power Ethereum users and dApps can afford the high fees, they essentially make Ethereum “unusable” for regular users. Small purchases and transactions are priced out at current gas fee levels.
Accelerated ETH Burn Supports Price
The network congestion does have some benefits, however. The high volume of activity and fees is accelerating the burn rate of ETH under the network’s fee-burning mechanism implemented last year.
Over 3,000 ETH tokens were burned in a recent 24-hour period. This puts constant deflationary pressure on ETH supply and supports the token’s price.
However, network usability issues could hamper Ethereum’s growth and adoption long-term. The situation illustrates the scaling challenges facing the blockchain before Eth2 upgrades are fully implemented.
