ETH costs explode: Will fees make Ethereum permanently unusable?
Traders and investors, especially those new to the scene, are flocking to centralised Ethereum alternatives to avoid horrendous transaction fees.
The whole ethos of cryptocurrency and DeFi is to gain distance and freedom from centralised banks and companies. However, these Crypto Legacy virtues seem to have been lost at the moment as Ethereum fees drive users to centralised providers like Binance.
The „Rekt Blog“ has taken a deeper dive into this potential paradigm shift by asking the crucial question: Has the game changed – or is it the players?
An ethical Ethereum suspension?
Binance suspended Ethereum and ERC-20 withdrawals on 19 February – ostensibly due to a „congestion issue.“ However, many industry observers have pointed out that the network was just fine.
The report points out that Binance and its enigmatic CEO, Changpeng Zhao, are not shy when it comes to criticising Ethereum (Go to Buy Ethereum Guide) to promote its own competing product, which has gained a lot of momentum recently.
The galloping gas fees on Ethereum have only added fuel to the Binance machine, making it easier to plug into its smart chain and the growing number of smaller DeFi projects and yield farms built on top of it.
Rekt rightly points out that industry experts see these products from the inside, but newcomers seem more interested in finding quick profits without the fees.
The report includes an interview with Calvin Chu, who was asked about Binance’s plans to supplant Ethereum. Zhao even commented that Binance’s market cap could surpass ETH’s when it surged to third place late last week.
When asked if the increasing adoption of products like Binance Smart Chain is having a negative impact on more decentralised systems, Chu replied:
„I think in the long run the market will see the value of decentralisation and products that are censorship resistant will get a legitimate premium. But if crypto is about giving users the power of choice, it should also be about giving users a „freemium“ model to dip their toes into DeFi and get comfortable with it without having to pay hundreds of dollars per transaction.“
Newbies stick with BSC
The report adds that many new users who start with BSC stay there because the platform is easier to use and much cheaper than Ethereum-based alternatives. Currently (time of this writing), the average transaction fee had risen to a record high of over $30.
However, newcomers seem much less concerned about centralisation than crypto connoisseurs who have been in the industry since the early days.
Many now see Ethereum as a „whale chain“ – especially now that it can cost as much as $50 to do a token swap on Uniswap.
Until big gas-saving solutions like Layer-2 or even EIP-1559 are implemented, the flow of crypto newcomers is likely to move further towards the centralised corporate giants like Binance. However, the „fee-saving update“ for Ethereum is already due in July.