- The Ethereum gas price has mooned as YAM farming cripples the network
- Some investors are paying almost as much in gas fees as the ETH they want to send
- The situation is reminiscent of the Cryptokitties debacle in 2017
The Ethereum gas price has continued to moon as the DeFi yield farming craze increases congestion on the network. At a time when many expected the Ethereum price itself to be rocketing, it is instead the Ethereum transaction fee that is being pushed to new highs in a repeat of the 2017 Cryptokitties craze that crippled the network at the height of the last bull market. The issue once again highlights that Ethereum 2.0 cannot come soon enough.
Ethereum Gas Price Hit Yearly Highs
The latest data from Etherscan shows that the average Ethereum gas price, which has been climbing this year anyway, has gone parabolic in the last three days as we can see from their Ethereum gas price chart :
The average Ethereum gas price currently sits at 223 Gwei, meaning the cost to send Ethereum has almost doubled in less than 24 hours. However, with failed and pending transactions becoming more and more common, people are forced to pay higher gas fees just to ensure their transactions get through, with yesterday’s maximum Ethereum gas fee being 104,860 Gwei – an incredible 470x the average. This rapid increase has resulted in some unsustainable real world costs:
2020 will be known as
„The year of the gas wars‘ pic.twitter.com/R1pwdVDJlB
— Don Crypto Collector (@DonCryptoDraper) August 13, 2020
Yesterday, the fees on Ethereum reached an all-time high of $6.87 million. Previous all-time high? $4.55 million during the 2017 speculative mania. Fees on Ethereum were 4.8 times higher than on Bitcoin yesterday pic.twitter.com/hQCp0hvxb8
— Larry Cermak (@lawmaster) August 13, 2020
YAM Farming Behind the Surge
The reason for the recent 3-day spike in Ethereum gas prices can be witnessed by just spending a minute or two on crypto Twitter – every man and his dog is farming YAM, a DeFi finance protocol, which requires ETH to delegate coins. The popularity of the platform has increased so much that more and more people are taking the chance that profits will outweigh the cost of farming the tokens, which has a knock on effect for everyone else trying to use the Ethereum platform:
Ethereum gas prices just hit 300 Gwei.
For better or for worse, small-scale farmers are being priced out.
— Nick C. (@n2ckchong) August 13, 2020
The situation is reminiscent of the Cryptokitties craze of late 2017, a collection of feline NFTs that caused a sixfold increase in pending transactions on the Ethereum blockchain in the space of a week, and once again sent the Ethereum gas price soaring.
The fact that the scenario is repeating two and a half years later with identical results shows how little progress has been made scaling Ethereum in that time, and highlights the need for Ethereum 2.0 more than ever. There were concerns in 2017 that Cryptokitties transactions were restricting crucial enterprise use, and with the number of companies using the Ethereum infrastructure having grown considerably since 2017, the fact that virtual YAM farming is having the same effect on the Ethereum gas price and congestion levels isn’t going to go down well with those that were sold on the blockchain dream.