With the rise of the decentralized web came a rise in Ethereum traffic. September 1, 2020, broke a new record with the average transaction cost topping $13.
Reports of long wait times and astronomical Uniswap fees are pushing the crypto community to its breaking point.
Cheaper to Hire Fedex Than Use ETH
Saving on gas left some users waiting 12 hours or more for their transactions to go through. In the fast-paced world of Uniswap and speculation, that’s a long time.
Some Reddit users have pointed out that high ETH fees contradict the purpose of fast, trustless transactions. With wait times like these, some have argued, it would be faster and cheaper to send a check with overnight shipping.
One reddit user posted a ghastly screenshot on the r/Nexo subreddit. This image shows a transaction of 504 Nexo (NEXO) tokens (about $80 at the time) with a fee of 184 Nexo tokens (about $30) at the time.
Reddit user Ed_Atts offered an explanation. With the high price of ETH and liquidity pool arbitrage opportunities,
Ethereum’s chain is just f*cked at the moment.
Vitalik Weighs In
Finally, Ethereum’s founder Vitalik Buterin offered an opinion. For weeks, gas fees have been a point of contention for users. On September 1, Vitalik defended ETH, pointing out that other solutions exist.
To those replying with "gas fees are too high", my answer to that is "well then more people should be accepting payments directly through zksync/loopring/OMG". Seriously, scaling to 2500+ TPS for simple-payments applications is here, we just need to… use it. https://t.co/J2KMJyLKv6
— vitalik.eth (@VitalikButerin) September 1, 2020
One solution was Loopring, an ETH-based decentralized exchange. Loopring has microscopic fees compared to Uniswap. However, users need to send ETH to their Loopring wallet to begin with. The number of coins traded on Loopring is also minuscule compared to other DEXs.
It may not be in the tens of millions (yet), but to us, $500k daily volume on https://t.co/7kOIOTYGAC is a big win. It's also a win for Ethereum: zkRollup DEXs are here, and people use it.
And when more people use it, it will not be congested, but actually more efficient
(@loopringorg) June 21, 2020
Another idea Buterin had was the OMG network. When Ethereum broke a previous all-time high record on August 22, Tether (USDT) announced that it would be available on the OMG network.
Tether accounts for the second most Ethereum chain transactions, after Ether itself. The OMG network can process thousands more transactions at a fraction of the cost, and it does so layered over the existing Ethereum network.
Over the following 24 hours, Buterin wrote several Twitter posts about the future of Ethereum. The much touted ETH 2.0 would introduce proof of work and sharding, which would allow for more simultaneous transactions, thus reducing gas fees.
He pointed out that an army of Ethereum engineers are working tirelessly to scale Ethereum.
Outgrown Its Shoes
Unfortunately, the existing solutions have not caught on yet. Some of this may be the DeFi craze caused by Uniswap, an exchange which only functions on the Ethereum blockchain. The demand for the capabilities of DeFi, yield farming, and DEXs has simply outgrown Ethereum in its current state.
As fees have risen, others have tried to take some of Ethereum’s traffic. Tron offers a decentralized exchange called JustSwap, which has reached $150 million in daily transactions in the first two weeks. At the same time, Tron-based Tether did not apparently catch on. In fact, It lost $1 billion USDT in a chain swap.
Meanwhile, Binance is waiting in the wings. An August 25 blog post makes the case for Binance Chain to become the king of DeFi. The giant exchange is suffering issues related to Ethereum traffic congestion.
Still long queues for ETH and ERC20 withdrawals. Working on it. Consider using other networks if possible.
— CZ Binance (@cz_binance) September 2, 2020
Solutions are out there ready for adoption, and engineers are working on efficiency. Nevertheless, the Uniswap speculators are growing impatient.