- Ethereum’s users get a reprieve from rising fees and network congestion
- The congestion was relieved by a drop in traffic on decentralized exchanges
- Uniswap’s 24-hour trading volume has crashed to $224 million
Ethereum News Today – reduced traffic from DEX (decentralized exchanges) has helped relieve congestion on Ethereum’s Blockchain. The slowdown in crypto trading on decentralized exchanges has alleviated congestion on Ethereum temporarily. This comes at a time when there have been concerns that the network had become overloaded.
Prices have tumbled for the top tokens which include the fast-growing arena for DeFi. SushiSwap’s SUSHI token is one of this year’s debuts. It fell by 77% over the last 30 days. DeFi lender Compound’s COMP token has lost a whopping 37%. Meanwhile, Uniswap’s (the biggest decentralized exchange) daily trade volume has crashed to $224 million from the record high of $954 million it posted on September 1.
The Reduced Congestion Has Made Ethereum’s daily Transaction Drop
According to Connor Abendschein, a crypto research analyst at Digital Assets Data:
“The general low volatility in the crypto market has contributed to the drop in transaction volume and rates.”
DeFi (an arm of the crypto industry where entrepreneurs develop semi-automated lending and trading platforms on Blockchain networks), has become more popular among investors and traders in recent months. But the congestion had triggered fears that the issue of elevated transaction fees on the Blockchain might make users and developers consider using alternative networks.
The total collateral locked in DeFi platforms reportedly jumped to $11.2 trillion in September from $2 billion (it reached at the end of June), according to DeFi Pulse. The amount has since dropped to $10 billion. The pullback has also made Ethereum’s daily transaction count drop to 1.3 million from 980,000 in the past two and a half weeks.
The Drop in Daily Transaction Has also Brought Transaction Fees Down
With less traffic on Ethereum, congestion has dropped. This has helped to reduce transaction fees. The average cost of completing a transaction on Ethereum has dropped to $2, from $14.58 according to Glass node. However, the transaction rate is still above the level that prevailed at the start of the year. According to Nicholas Pelecanos, who serves as the head of trading at NEM Ventures:
“Ethereum’s transaction fees are slowly returning to normal. The DeFi hype that recently gripped the market for most of this year is beginning to subside.”
However, the relief could be only a temporary solution for ETH users. Because the fees could shoot back up quickly if a new DeFi project emerges or if the coins’ price rallies. The second-largest crypto by the market is currently valued at $340. This figure is well off its two-year high point of $480 posted on September 1.