The cryptocurrency market has seen a decline in the market in the last week, as many cryptocurrencies have fallen in value almost overnight, leading to fears of the start of a bear market.
Furthermore, following this turmoil in the market, transaction fees on the Ethereum network have risen and recently reached full-time highs, thanks in part to the influx of many new on-chain transactions initiated by various decentralized financial protocols that have emerged. into cryptocurrency in a few months. Last.
While DeFi has provided financial products to investors through decentralized exchanges through various lending protocols that reward liquidity providers, this aspect of the technology has created an unwanted environment for high transaction fees, which in turn has seriously affected the value of many tokens.
Technically, today’s Ethereum petrol prices correspond to a relatively limited number of transactions that can be made with a single block. Miners in this scenario may prioritize more expensive transactions, so actual gasoline prices increase as a result.
However, there are several secondary reasons that aggravate the current situation, forcing the “main developers” of Ethereum to hold a virtual meeting on September 4, where gas tokens will be the main topic of discussion.
Basically, gas tokens such as Chi Gastoken (CHI) and Gas Token (GST) use a gas extraction mechanism to free up storage space at the Ethereum VM. When it comes to gas brands, burning fake “semi-smart contracts”, which some believe can be more effective than cleaning the data directly. To further simplify the issue, gas tokens tend to designate some storage space on the Ethereum chain to make money at a later date.
In essence, users can use a small amount of ether (ETH) at current gasoline prices to secure gas that can be used later without risking a price increase as the price of the embossed gas sign will be equal to the price of the gas used. Jordan Earls, co-founder and lead developer of Qtum, a decentralized blockchain platform, told Cointelegraph:
“This actually results in the network not responding properly to petrol price increases as we see it today, as some people with access to these tokens can use this cheap gas now, but also have access to their high priority transactions without actually using any ETH. ”
How to deal with rising costs?
One of the most obvious solutions to lowering current gasoline prices may be to reduce the demand for Ethereum transactions. This may include the use of zk compilation updates and other scaling techniques for the other layer. Another potential solution could be to improve the efficiency of blockchain and smart contracts operating on the network. However, such solutions are difficult to implement on request.
Jagdeep Sidhu, lead developer of the Syscoin blockchain platform, told Cointelegraph that a large amount of Ethereum traffic can be easily unloaded without users having to leave the platform or look for other options: accessible to ERC-20 holders via a two-way bridge. Tier 2 solutions can provide a cheaper way to work with different smart contracts, adding: “Using these services will create a balanced effect and improve the usability of the Ethereum main chain.”
However, Mike Totongi, lead developer of Verus – an unidentified and privacy-focused blockchain platform – believes that Ethereum’s core design may conflict with the platform’s ability to regulate gas prices, especially with consumer interest in ETH or various related offerings, with continued growth. … Totnji added:
“A complete lack of awareness of blockchain protocols with lower financial incentives operating in the above contracts can lead to perverse incentives that have nothing to do with blockchain efficiency and in some cases can lead to unintended consequences such as sky-high petrol prices “.