NFT
In a notable shift in Ethereum’s gas consumption patterns, Non-Fungible Tokens (NFTs) no longer reign as the biggest gas guzzlers on the network. Data from crypto analytics platform Nansen showed that NFT marketplaces accounted for just over 3% of all gas consumption last week. In stark contrast, the decentralized exchange Uniswap used more than ten times that amount, clocking in at 31.99%. Nansen highlighted the development, tweeting:
Gone were the days when NFTs topped Ethereum’s gas consumption charts. This week, OpenSea and Blur together accounted for less than 10% of the top 20 gas consumers.
And against all gas consumers, the NFT marketplaces were just over 3%. Uniswap, on the other hand, was 10x more – 31.99%. pic.twitter.com/4NUF6Yb3eX
— Nansen 🧭 (@nansen_ai) May 19, 2023
This shift occurred despite a continued rise in Ethereum gas prices. Such price increases are not new to the Ethereum network, but have become unusual since Ethereum’s transition from a proof-of-work (PoW) protocol to a proof-of-stake (PoS) system, a move known as as The Merge, to be completed in September 2022.
Despite initial hopes that this transition would lower gas rates, recent events seem to tell a different story. One trader is said to have paid as much as 64 ETH, worth approximately $118,600, in fees for a single transaction.
The congestion and high gas prices of the Ethereum network have been attributed in part to intense activity caused by an increase in the trading of meme coins, such as PEPE tokens and Floki Inu. This led to an overflow of transactions and subsequently skyrocketing gas prices.
The Ethereum community has responded to these challenges and several Layer 2 (L2) scaling solutions have been proposed to lower gas prices. Layer 2 solutions, such as state channels, plasma chains, and rollups, aim to offload some computational tasks from the main Ethereum blockchain, reducing the need for gas and its cost.
High gas prices have also prompted investors to switch to alternative networks, such as Cardano. The introduction of the Hydra upgrade, a layer 2 protocol on the Cardano blockchain, has made the network more attractive to investors by addressing the scalability issue.