Report said that Ethereum’s gas fees have spiked to record highs, as DeFi protocols have increased above $1,000.
Paolo Ardoino, CTO at Bitfinex:
“Bitcoin’s recognition as a ‘good thing’ has always seemingly been judged according to its price. Yet amid more feverish speculation in frothy markets, it is important to remember the underlying vision behind the king of crypto. Bitcoin is the base layer of an emerging alternative financial system. The discontent that has erupted as the r/WallStreetBets Reddit group does battle with citadels may well add further fuel to bitcoin’s ascent.”
However, with many DeFi projects requiring the execution of complex smart contracts, there are reports fees associated with using protocols requiring complicated transactions now exceed $1,000. Amid the chaos, Twitter-user “Olive Allen” reported estimated gas fees of nearly $5,000 to accept a bid on Rarible.
Almost 5k is the price to accept a bid on @rariblecom now!! 😂 Is it because of ETH high gas fees⛽️ or some type of bug 🐜 ? 🤔 Thoughts ? pic.twitter.com/tYoV1ilB85 — Olive Allen (@IamOliveAllen) February 3, 2021
The report said that a single large transaction on Synthetix was estimated at above $1,100, as the protocol is undergoing an upgrade which could affect estimates. But even simple swaps using decentralized exchanges Uniswap and SushiSwap cost from $40 to $75.
WTF??? pic.twitter.com/0luArQfeaK — Ran Neuner (@cryptomanran) February 3, 2021
Responding to the high fees, ConsensusRough podcast co-host ‘Checkmate’ warned DeFi users to consider the expense involved in executing smart contracts before investing. He shared the screenshot of a user that purports to show estimated gas fees exceeding the price of Ether.
Think very hard about whether you will be able to unwind your defi positions when the time comes to sell and gas fees are exponential. Worth considering this risk because inability to exit is increasingly looking to be a reality. https://t.co/m9d09pUe0a — _Checkmate 🔑⚡🎟🌱checkonchain.com (@_Checkmatey_) February 3, 2021
Likewise, since breaking into new price highs on February 2, Ether has gained around 14%. Bitcoin is also rallying, testing $38,000 after gaining 6% in the last 2 days. Ether’s record fees are highlighting the utility of second-layer scaling solutions ahead of Ethereum’s Eth2’s overhaul.
Thus, Chandler Song, the CEO and co-founder of Ankr Network, described the crypto bull run as “expos[ing] a lot of vulnerabilities of the Ethereum network, which most DeFi projects are built upon.”