The growing popularity of the decentralized finance (DeFi) industry has brought optimism to the cryptocurrency industry. Total locked-in value increased from $ 1 billion to $ 59 billion in less than a year. The amount locked on the top 5 platforms saw $ 24.33 billion.
As the interaction with DeFi protocols increased, Gas charges started to increase. Currently, the Ethereum (ETH) network hosts most of the largest DeFi projects. Gas fees have been rising steadily since November 2020, with the average transaction cost hitting the 373 Gwei level. Calculated at the current Ether price, $ 11.72 was due on February 23.
Wages have fallen 65 percent since February 23, and the average cost fell to 131 Gwei on March 3. The data revealed that a transaction fee of less than 70 Gwei was paid at certain times of the day.
DeFi transaction numbers decreased as the market got better
The decentralized exchange (DEX) transaction volume may be behind the decrease in Gas fees in the last few days.
According to data from Dune Analytics, the DEX trading volume has been declining since it reached $ 4.35 billion on February 23, and daily growth data has also fallen 50 percent on March 3.
According to Connor Higgins, a data scientist at Flipside Crypto, wages have dropped in the past few days, but instead of attributing this to a specific cause, Higgins argued that the high wages seen on February 23 were too much.
“Average wages have dropped, but the value reached in the previous week was unusually high, and it actually seems to be normalizing.”
As seen in the chart above, it was significantly higher than the average between February 22 and February 23 when network congestion increased, while the BTC price dropped 23.6 percent and altcoin prices also saw a sharp correction. Gas prices returned to normal after the market stabilized.
Increased NFT transactions clog Ethereum network
Those using the Ethereum network could expect to see a drop in Gas fees as DeFi transactions decreased, but that was not the case. Because, with the increase seen in the non-fungible token (NFT) sector, wages increased again.
As more and more NFT projects hold auctions, transaction costs and network congestion increase.
Layer 2 solutions and protocols that are cross-linked to Ethereum, such as Polygon and Binance Smart Chain, have emerged in the last two months, and many projects have started using them as an alternative to high fees.
Protocols such as Aavegotchi and SushiSwap have attempted to integrate with Polygon. Since transaction costs and speeds are more affordable compared to Ethereum, many NFT and DeFi projects are likely to move there.
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