Gas prices for layer 1 Ethereum can only be described as insane at the moment. According to Bitinfocharts, the average transaction fee on Ethereum spiked to $63 on Nov.9, its second-highest level in network history.
The peak came on May 12 when the average gas price hit $70. The current average cost of a transaction at the time of writing is around $57.
Average Ethereum Transaction Fees – Bitinfocharts.com
Gas costs vary wildly depending on the transaction type. A simple ERC-20 transfer will cost a lot less than a complex smart contract interaction. According to Etherscan, it costs around $45 to simply send Ethereum-based tokens.
To carry out a token swap on Uniswap layer 1 or add or remove liquidity from a DeFi protocol can cost a painful $130 in gas. Crypto critic “Mr. Whale” posted an example of the gas fee insanity:
It costs $500+ in fees to transfer $20 on the #Ethereum blockchain.
The banks are quivering in fear… pic.twitter.com/q2JIHpBKgn
— Mr. Whale (@CryptoWhale) November 10, 2021
The driver of this gas insanity is likely to be the Ethereum Name Service (ENS) airdrop which launched on Nov. 9 and coincided with the gas spike.
In order to claim the ENS tokens, gas must be used, and since domain holders are getting them airdropped for free, they won’t mind spending it. Tokens can be claimed up until May 4, 2022, but those eligible want them right now as prices are pumping.
Up until Binance listed ENS on Nov. 10, the only way to sell them was on Uniswap, and it cost users hundreds of dollars in gas to do so.
According to CryptoFees, ENS generated $720 million in network fees on Nov. 10 and $834 million the previous day when it launched.
Registering an Ethereum domain name costs around $5 per year, but the gas fees can be in excess of $250 at the moment.
ENS hit an all-time high of $83.40 during Wednesday morning’s Asian trading session and is currently up 37% on the day.
Burn Baby Burn
The only upshot of the ridiculously high network fees for ETH holders is that more of the asset is being burnt via EIP-1559.
According to Ultrasound.Money, 841,000 ETH, has been burnt since the upgrade in early August. At current prices, this is worth around $3.9 billion.
The fee burning tracker is reporting that ENS has burnt 500 ETH, or around $2.3 million over the past 24 hours, which is more than MetaMask.