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Cryptogambling / 8-Month High Ethereum Gas Fees Amid ERC-404 Token Mania

8-Month High Ethereum Gas Fees Amid ERC-404 Token Mania

Publish Date: 13/02/2024
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The rising demand for Ethereum network usage, fueled by the buzz around ERC-404, has led to gas fees reaching their highest point in eight months. Recently, the average gas price reached a height of 70 gwei, or $60 per transaction, with some transactions going as high as 377 gwei. Ethereum’s gas expenses haven’t been this high since May 12, 2023.

Hype Around ERC-404 Tokens Calms Down

ERC-404 is an innovative unofficial standard that merges the features of ERC-20 and ERC-721 tokens, enabling fractionalized NFT ownership. On February 9, the market capitalization of the first token created utilizing the standard, known as Pandora, peaked at $324 million. It was subsequently halved to $150 million, and each token’s value dropped to under $15,000.

Other tokens created with the same standard did not gain as much traction. The second-largest token, DeFrogs, reached a market capitalization of about $38 million. The price of it has dropped by 68% from its peak. Since their release, the prices of Tokens Rug and Froggie Friends have significantly decreased.

The Drawbacks of ERC-404 Tokens

This surge in gas prices comes from the increased popularity of ERC-404 tokens, which have captured the crypto community’s attention since their launch on February 5. According to Gaslite co-founder PopPunk, an ERC-404 token consumes around three times the amount of gas compared to a standard NFT transaction.

Ethereum users and developers are collaborating on potential strategies to tackle the issue of escalating gas fees. Potential approaches being considered include streamlining smart contracts and investigating secondary layer scaling technologies.

The current surge in Ethereum gas prices highlights the importance of understanding how token standards like ERC-404 can impact network usage and fees. This standard allows for fractionalized NFT ownership, making it an attractive option for investors looking to enter the NFT market with a lower entry price.

ERC-404 transaction demand is putting strain on the Ethereum network, causing an uptick in gas prices and network slowdowns. The trading volume data from CoinMarketCap indicates that transactions worth over $600 million were recorded for Pandora, DeFrogs, and other ERC-404 projects during the previous week. This surge in activity was primarily driven by Uniswap, which experienced a significant increase in network usage on February 9.

The Future of ERC-404 and Ethereum’s Gas Fees

As the ERC-404 standard continues to evolve, it will be crucial for developers to focus on optimizing gas consumption and improving overall network efficiency. The current spike in gas fees underscores the importance of finding long-term solutions to address this challenge and maintain the accessibility and sustainability of the Ethereum network.

One potential solution is layer-2 scaling, which could help reduce transaction costs and improve overall network performance. Another approach is enhancing smart contract efficiency through better coding practices and optimizations.

The rise of ERC-404 tokens and the subsequent surge in gas prices have significant implications for the Ethereum ecosystem as a whole. Ethereum network requires constant improvement and adjustment to integrate new token standards, ensuring affordability and ease of use for its users. Additionally, it highlights the importance of community dialogue and collaboration in addressing shared challenges and finding sustainable solutions.

The Road Ahead

As Ethereum continues to explore new token standards like ERC-404, it will be essential to find a balance between innovation and sustainability. This includes addressing gas fees and network congestion through improved efficiency and scalability solutions. It also requires ongoing collaboration and communication among developers, users, and the wider Ethereum community to navigate these challenges together.

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