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Ethereum Gas Fees Reach Peak Levels
Gas fees on the Ethereum network have surged to levels not seen since March 2023, primarily driven by the growing interest in a new experimental token standard known as ERC-404.
Factors Driving the Surge
On February 9, Ethereum gas prices peaked at an average of 70 gwei, equivalent to $60 for a standard transaction, with peak gas costs reaching as high as 377 gwei, a level not seen since May 12, 2023.
The heightened gas fees can be attributed to several factors, with the primary catalyst being the hype surrounding the ERC-404 token standard. This excitement has led to a substantial increase in trading activities, particularly those highlighted by projects such as Pandora and DeFrogs.
ERC-404 Token Standard and Its Impact
Initiatives based on the ERC-404 standard have generated over $600 million in trading volume in the past week alone. Since its launch, Pandora has seen remarkable growth, with an over 6,100% increase in value and a trading volume exceeding $474 million.
ERC-404 aims to link ERC-721 non-fungible tokens (NFTs) with ERC-20 tokens, enabling the creation of fractionalized NFTs. This allows multiple users to collectively own a single NFT and utilize their share for trading or collateralizing loans.
Unofficial Decentralized Architecture
This new “standard” has garnered significant attention within the crypto community. While currently unofficial, there are rumors of a proposal to address this and unlock extra utility such as staking. The developers behind Pandora are actively working on optimizing gas costs associated with ERC-404 transactions.
Uniswap Drives Surge in Ethereum Network Activity
On February 9, the Ethereum network experienced a surge in activity, largely driven by increased usage of the decentralized exchange protocol Uniswap, with a significant portion of the Ethereum burned during this period resulting from activities on Uniswap.
The heightened activity on Uniswap can be attributed to substantial trading volumes generated by projects such as Pandora and DeFrogs, along with other ERC-404 projects.
Vitalik Buterin’s Suggestions
During a Reddit AMA, Ethereum co-founder Vitalik Buterin highlighted the prolonged period without an increase in the gas limit, suggesting that a modest increase was reasonable. He proposed that such an increase could lead to a limit of around 40 million.