Ethereum fees rises 270% in 7 days as ETH surges 9% – Why?

Journalist

Posted: February 12, 2024

• Ethereum’s fees jumped 270% between the 5th and the 9th of February.
• ETH rose over 9% in the last week in USD terms.

The blockchain ecosystem has seen a meteoric rise in recent years, with the entry of several new projects and advancements of the existing ones.

However, amidst all these developments, the status of Ethereum [ETH] as the leading revenue-generating protocol has not been threatened.

According to AMBCrypto’s scrutiny of Crypto Fees data, the smart contract network collected $8.6 million in fees in the last 24 hours, significantly higher than some other projects in the list.

To get a sense of Ethereum’s dominance, the second-ranked Uniswap [UNI], the largest decentralized exchange (DEX), generated just $2 million in fees, one-fourth of Ethereum’s total.

Moreover, Ethereum’s tally was 5.5x more than that of the first blockchain, Bitcoin [BTC].

Ethereum’s daily fees spiked significantly in the last week, jumping 270% between the 5th and the 9th of February.

Source: Crypto Fees

What led to the sharp rise?

AMBCrypto investigated Ethereum’s network activity over the last week to understand the factors behind the fee spike.

The transaction count on the blockchain showed stagnancy without any meaningful spike upward. However, the transfer volume, i.e. the total value of ETH moving on-chain, jumped 159% in the last week.

This proved that the number of high-value transactions increased in recent days.

Source: Santiment

However, it should be noted that the average fee of a transaction is not related to the size of the transferred ETH. Hence, the only other plausible reason behind the rise in fees could be the jump in ETH’s market value.

Using CoinMarketCap data, AMBCrypto noted that ETH rose over 9% in the last week in USD terms. This would have likely given a fillip to the network’s total earnings.

ETH burn rate increases

As we know, a set amount of ETH is burned for each transaction. This corresponds to the minimum amount required for a transaction to be considered valid, i.e. base fee.

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In the past week, Ethereum’s base fee rose sharply, in turn indicating a spike in ETH, which was pushed out of circulation.

The deflationary pressure could have a positive impact on the network’s long-term economic dynamics.

Source: Glassnode