Gas fees refer to the cost of conducting a transaction or executing a contract. For example, this could take the form of exchanging into a stablecoin or minting an NFT.
Since the summer of 2020, Ethereum gas fees took off primarily due to the explosion of DeFi use on the chain. Although network activity has tailed off significantly since May 2021, the adage of Ethereum being an expensive chain to use still prevails.
Ethereum gas fees are priced in gwei, which is a unit of measure equivalent to one billionth of one ETH. The exact gas cost depends on the network’s congestion at the time of transacting, with peak periods requiring higher gas fees to push through the transaction.
The current average gas price is $13.28, down significantly from the May 1 local top, when a transaction cost $474.57 on average.
Stablecoin usage
Stablecoins are cryptocurrencies designed to minimize price volatility by keeping a fixed value, regardless of the price of Ethereum.
The market offers various types of stablecoins, such as asset-backed, including fiat, crypto, or precious metal assets, and algorithmic, which add to or subtract from circulating token supply to peg the price at the desired level.
The chart below accounts for over 150 stablecoins, but the most prominent are USDT, USDC, UST, BUSD, and DAI. USDT is the biggest stablecoin by volume and market cap, but in recent times, USDC has closed the gap.
Save for sporadic spikes, USDT’s gas usage has been trending downward since July 2020. Current usage is equivalent to approximate levels seen in January 2020.
USDC’s gas usage follows a slightly different pattern by raising to peak in April 21, again, except for isolated spikes higher since then, the overall trend has been downwards from that point.
DeFi usage
Decentralized finance (DeFi) is an emerging technology that cuts out banks and financial institutions, linking users directly with financial products, which typically include lending,…
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