The Ethereum network experienced a substantial decline in gas fees during the first week of June, marking a notable cooldown from the peak reached in May. This reduction in transaction fees has been attributed to the waning influence of memecoins and the decrease in maximal extractable value (MEV) bot activities. In this article, we will delve into the factors that contributed to the surge in gas fees, explore the impact of the memecoin frenzy, and discuss why individuals are drawn to these digital assets.
Understanding the Surge in Ethereum Gas Fees
Gas fees or transaction fees on the Ethereum network have been a topic of concern for users due to their volatility and high costs. However, recent data from Dune Analytics shows that the average gas fee has dropped to $7.34. The numbers display a significant decline from the peak of $20 observed last month according to a report. The median gas price, denominated in gwei, has also decreased from nearly 140 gwei to 24 gwei, providing relief to Ethereum users.
The Memecoin Frenzy and Its Impact on Ethereum Gas Fees
Late April and May saw a surge in the popularity of memecoins. While the Bitcoin network was flooded with Pepecoin (PEPE) transactions, Ethereum was plagued by the likes of Aped (APED) and Bobo Coin (BOBO), which led to a unique shift in the top 10 gas-burning altcoins.
These memecoins overshadowed established tokens like ETH, Wrapped Ether (WETH), and Tether, dominating network activity and driving up gas fees. The overwhelming demand for these created congestion on the Ethereum network, resulting in increased transaction costs.
Factors Influencing the Rise of Memecoins
Memecoins, despite their typicaly speculative nature, have attracted a considerable following for various reasons. One key factor is their association with Internet culture, which appeals to a younger demographic seeking fun and community-driven investments.
The allure of potentially high returns within a short period also contributes to the appeal of these digital assets. Moreover, the relative ease of creating and launching them on decentralized platforms, compared to the lengthy processes involved in listing on centralized exchanges, has fueled their proliferation. On the downside, these also drive their inherent volatility.
The Cooling Effect: Memecoin Frenzy and Ethereum Gas Fees
As the memecoin frenzy has subsided, Ethereum gas fees have witnessed a significant drop. The declining popularity of memecoins, coupled with a decrease in maximal extractable value (MEV) bot activities, has alleviated congestion on the Ethereum network. Consequently, users can now transact with reduced fees, providing a more accessible and cost-effective environment for Ethereum-based activities.
Final Thoughts
The Ethereum network has experienced a noteworthy decline in gas fees following the cooling down of the memecoin frenzy. This drop in transaction costs offers a respite to Ethereum users who had previously grappled with high fees.
The rise and subsequent decline of memecoins have shed light on the dynamics of internet culture and speculative investments. As the cryptocurrency landscape continues to progress, it is crucial for users to remain vigilant, exercise due diligence, and navigate the market with caution.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.
