Tag: eth gas prices

Ethereum Dominates DeFi with 96% of Transactions, Buterin Discusses ETH Gas Fees

Ethereum has set the tone for the decentralized finance (DeFi) boom this year, and according to DeFi analytics, it seems to have dominated particularly during the third quarter of 2020.

Ethereum’s solid performance in Q3 due to DeFi

According to DeFi data analytics DappRadar, most decentralized finance applications and projects operate off the Ethereum network, with ETH’s total value locked surpassing $10 billion at the time of writing. The top DeFi projects are attributed to Uniswap protocol, MakerDAO, Curve, Wrapped Bitcoin (WBTC), and Aave.

Analysts have also observed that 96% of DeFi’s total transactions were carried out on the Ethereum network in the third quarter (Q3) of this year. Uniswap (UNI), MakerDAO (DAI), and Curve were responsible for most of the transaction volume. With Uniswap’s growing popularity, the amount of transactions also spiked momentarily when UNI governance token was first introduced and made freely available for claim for anyone who had ever used the platform.

The DeFi craze has sent Ethereum transaction fees through the roof, hitting an all-time high last month. In Q3, the total amount of miner fees soared from $100,000 to $900,000 in less than an hour. Data from crypto analytics firm Glassnode showed that Ethereum (ETH) miners saw an increase in their revenue, as a response to high gas fees (gwei) on the blockchain network.

Ethereum network fees spike

ETH miners made as much as $166 million from transaction fees in September, surpassing Bitcoin miner revenue, which seems to have decreased in comparison. This suggests that it is way more profitable to mine Ether than Bitcoin.

With the growing amount of crypto assets pouring into DeFi, and industry experts have repeatedly questioned whether the Ethereum blockchain could sustain the growing amount of transactions in the long run.

Co-founder of Ethereum Vitalik Buterin had previously assured that his team of developers was actively working on decreasing ETH gas fees. Taking to his Twitter, he provided an update and said that rollups, a layer 2 cryptographic technique designed to improve scalability on the chain, was currently in the works by devs to increase Ethereum’s performance and decrease network fees. Referencing an example of “healthy transaction activity”, he said:

“When gas prices get back to the troposphere, great things happen. Let’s hope we get rollups out soon so every day can be like this (actually probably even >10x cheaper).”

As transaction fees are going up, other smart contract platforms, such as Binance Smart Chain Radix, among others, on DeFi’s current boom and take on Ethereum as a competitor.

In tandem with the DeFi boom, Ether’s price rallied on the market over the weekend. At the time of writing, it is trading at roughly $375 on CoinGecko and is up by 6.4% in the last week.

Ethereum’s Zinken Testnet Launch Is a Huge Success, Buterin Says “Scalability Will Go Up” on Eth 2.0

After having suffered from low validator participation on the last “dress rehearsal” they launched in preparation for Ethereum 2.0 blockchain, Ethereum developers have finally achieved a successful testnet release with Zinken.

Spadina testnet fails, enter Zinken

Zinken, another short-term rehearsal testnet launch by developers to prepare for the official release of Ethereum 2.0 mainnet’s Phase 0, has proven to be successful, unlike its precedent Spadina. The goal of Zinken is mainly for developers and stakers to practice the genesis process.

Since genesis is considered “a risky and difficult part of the process,” the Ethereum team have set up a few testnets in parallel with Medalla in order for validators to practice before Ethereum 2.0 mainnet was released and there was real Ether (ETH) at stake, so to speak.

Zinken’s launch was reported to have been smooth sailing, with enough participation to keep the chain running. In addition, no major bugs were observed. 

Zinken testnet proves to be successful

Unlike Spadina and Medalla when both were first launched, Zinken did not suffer from low participation rates, which are generally due to validators who signed up for the testnet failing to bring their clients online. Zinken is the first testnet to have achieved the finality threshold within a few minutes of its release, making it the most successful “launch rehearsal” for the team so far.

Maintaining a high participation rate during testnet launches is crucial to the health of the blockchain. For the network to run smoothly, at least 66% of the blocks need to be confirmed for finality to be achieved. With Zinken, though participation rates still did not hit an ideal standard of 90%, it was still recorded to be above 75%, making Ethereum developers optimistic about the anticipated 2020 launch of Ethereum 2.0 Phase 0.

Ethereum co-founder Vitalik Buterin was also present during the launch of Zinken, and he announced that his team might still hold a few more testnet rehearsals, but they would likely exclusively be reserved for Ethereum developers.

What to expect from Phase 0 of ETH 2.0 mainnet

Ethereum 2.0 mainnet will be launched in different steps so that the blockchain could be broken down and perfected to the last details. The first step, Phase 0, will feature a beacon chain, which is the first building block for the new mainnet.

The current Ethereum 1.0 blockchain will operate in parallel with Ethereum 2.0. On the new main chain, which is to run on a pure Proof-of-Stake protocol, the Ether (ETH) that stakers input will be locked in. Transfers and withdrawals will not be possible until other phases of the Ethereum 2.0 blockchain are launched.

Speaking about his team’s anticipation of the first phase of Ethereum 2.0 being launched in 2020, Ethereum Foundation’s lead coordinator Danny Ryan said his team was on track for the 2020 launch of Ethereum mainnet, even if there were still a few things to be perfected through testnets like Zinken. He said:

“This is an ongoing dialogue with client teams, and we need to take a second to look at this testnet. But it is my understanding that this will trigger the next series of things. There’s always blockers that might show up, so we need to do this responsibly.”

What about high Ethereum gas fees?

In a live stream for Zinken’s launch, an Ethereum developer asked Buterin “whether transaction fees on Ethereum are once again going to fall so low that it would onboard the unbanked, or bank the unbanked, with solutions like layer 2 and sharding coming up.” He asked if he thought layer 2 solutions and sharding was going to help bank the unbanked.

To which Buterin replied:

“I think so. If we can get rollups and sharding out, then the scalability of the Ethereum chain is going to go up by a very large factor, of anywhere from 100 to 10,000, depending on which technologies are stuck together. That increase is going to be enough to give application developers hope that if they build something that reaches 10 million users, they are still going to be able to run it.”

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