Ethereum Gas Fees Reach $84M Thanks to ERC-404 Hype
Gas prices on Ethereum hit levels not seen since the memecoin frenzy of May 2023, as users flock to ERC-404 transactions.
Gas fees for transactions on the Ethereum network soared to a 9-month high last week, driven by the increasing popularity of the experimental token standard ERC-404. According to on-chain analytics, the network collected a staggering $84 million in gas fees over the past week, marking a 61.5% increase from the previous week. The average gas price paid per transaction jumped to 71 Gwei on February 9th, a level not seen since the memecoin frenzy that occurred in May 2023, which saw the rise of the infamous Pepe token.
The surge in gas fees came shortly after the launch of the first functional ERC-404 project, Pandora, which has garnered significant demand in recent days. Since its launch, the Pandora token has seen a remarkable 270% increase. ERC-404 is an innovative token standard that combines the properties of both ERC-20 (fungible tokens) and ERC-721 (non-fungible tokens). This unique standard allows tokens to be both fungible and non-fungible at the same time, enabling fractional ownership of NFTs. However, it comes with a higher gas requirement, with an average ERC-404 transaction requiring three times the gas of an average NFT transaction.
In addition to the surge in gas fees, there has also been a notable increase in daily on-chain transactions, rising by 17% over the week. On February 16th, a record 1.15 million transactions were settled, the highest for the month.
Currently, Ethereum is trading at $2,790, experiencing a minor retracement in the last 24 hours, dipping below the $2,800 mark. The broader market sentiment reflects "extreme greed," indicating a significant fear of missing out (FOMO) among market participants.
Analyst comment
Negative news: Ethereum gas fees hit $84M last week, reaching levels last seen during the memecoin frenzy of May 2023. Gas price paid per transaction bounced to 71 Gwei on Feb 9. This spike was fueled by the hype around ERC-404 tokens. ETH witnessed a minor retracement, dropping below $2,800. Market analysis: The market may experience increased transaction costs and volatility due to the high gas fees and FOMO sentiment. The launch of ERC-404 projects like Pandora has generated demand but also raised concerns about scalability and cost.
