In the letter
- Ethereum transaction fees are decreasing.
- This could mean that there is less activity on the blockchain.
- And that this summer’s hype around DeFi is coming to an end.
The average price of a file Ethereum transaction it hit its lowest price since mid-July, when this summer’s decentralized finance boom had just begun. Lower fees could mean there is less activity on the Ethereum blockchain; Taxes skyrocketed this summer as miners tested themselves under the weight of this summer’s DeFi game. Does this mean that the hype is over?
Saturday, the average price of a Ethereum the trade reached $ 0.905, reaching $ 1,029 on Sunday, second data from the BitInfoCharts metrics site. This is a steep drop from highs up to $ 14,583 for a single Ethereum transaction in early September.
The fees paid for Ethereum transactions go to the Ethereum miners, who spend the computing power to process the transactions. Ethereum transaction fees increase when there is more demand for the miners’ computing power than supply.
This occurs when the network is strained under the wave of activity. When many people are processing transactions at the same time, miners prioritize the highest bidders.
Consequently, the rates decrease when the network is less busy or when there are adequate miners to handle the supply. The hash rate has increased on Ethereum blockchain since July, but its growth has been constant; commissions paid on the Ethereum blockchain are much more volatile.
The fact that the average fee for an Ethereum transaction has dropped to levels not seen since July could mean that this summer’s hype around decentralized finance has dropped. Decentralized finance, or DeFi, refers to non-custodial smart contracts, loan protocols, and synthetic stocks.
As of the end of June, these protocols have begun to offer additional incentives to those who have used the platforms, sometimes up to 1000% APY. This has brought money flooding into the market and the commissions increase accordingly.
Make no mistake: people are still interested in decentralized finance, an industry that still seems to be growing. Second DeFi Pulse, a metrics site for DeFi protocols, investors blocked $ 11 billion worth cryptocurrency in the DeFi protocols.
But as that figure increased by a billion dollars every week, the growth has declined as the market reaches its ceiling … for now.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.