For awhile now, the space faces an unexpected hike in gas fees, which averages around $22 and above. The expensive transaction fees continues to rise, which experts linked to the overwhelming platform usage from the DeFi sector. Crypto enthusiasts have gone to social media to express displeasure to the sudden hike in the fee, making it difficult for retail investors to record notable gains.
The new technical problem came during the time the platform recorded its one billionth, showing how extensive people used the network created in 2015. Many DeFi projects consumed millions of ETH, following various transactions, with the biggest user being Uniswap. The creators continue to search for a convenient solution to reduce price hike incidences like this.
Retail DeFi traders losing to increased gas fees
The network is causing some problems for decentralized financial system’s retail traders, who revealed that the exorbitant fee causes them losses. Interestingly, big investors in the space do not experience such hikes, making it convenient for them to record notable gains, especially with the bulky assets.
Ever since DeFi joined the blockchain industry some years ago, new investors look into investing through some protocols, paving road for dominance in the sector. People are able to earn and make a living through different projects powered by its technology. Unfortunately, making profits on trading is not easy anymore because of the growing transaction fees charged.
Many experts are interested in the current issues surrounding the hiked fees, leading to the analysis of some charts. Experts revealed that trading sessions costs in Asia is similar to America’s, with transaction fees being very high from the regions due to heavy usage.
As smaller traders battle with transactions, whales enjoy a less competition. The whales have no problem with their gas fees, nor taking in more transactions, which retailers struggle to have. The bulk buyers recorded no significant increase in gas fees than usual, which is a clear difference from their counterpart.
Ethereum network becoming unsuitable for retail traders
Some experts made an analysis of 2020’s Ethereum transactions, which describes holders with more than 20 ETHs taking more transactions than retail holders. The analysis shows that smaller holders don’t take on as much transactions to avoid transaction fee charges, which continues to discourage their market participation with this 2021’s price hike. The small buyers might exit the Ethereum network to work on other platforms that supports retail traders.
The network continues to struggle with different problem like scalability and hiked gas fees. The creators informed the public of the new creation, the ETH 2.0, that would reduce gas fees and improve the scalability problems. The heavy traffic on the network worsens the transaction processing speed, which currently delays thousands of transactions.
The ETH market is gradually growing, with the recent price surge that saw the price within the $1,700 range, making whales gain incredibly, without reducing transactions due to gas fees. The increased gas fees might be connected to the new surges the digital asset currently sees. Some predict higher bass fees in the future, pushing small buyers to other sectors.
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