Ethereum in its labyrinth
Every time I read or hear testimonials about Ethereum I feel like I'm being told about those very modern highways, with lots of security, very clean public restrooms, lane spacing, 50 lanes but with only one booth for passing vehicles and an extremely expensive usage fee. Recently a friend of mine paid an outrageous $300 transaction fee for the upgrade of an NFT collectible, which is part of his reward for his addiction to a game whose name I can't remember but which resembles Pokemon and which was worth $200.
Precisely this very particular circumstance of Ethereum is one of the things that keep me away from its ERC-20 tokens and the cryptocurrency itself as such, inasmuch as after its announced update the problems that are so much pointed to this smart contract platform are still present, ostensibly harming its users, especially those with small investments given the high gas costs exhibited by the network.
But Ethereum is in a moment of pleasure with its price, for now exhibiting a practically vertical curve as never in its history, which encourages many people to use its platform either for its DeFi system (for now the most popular in the crypto world) or for just owning a few ethers to generate profits given its attractive value, however since they started the upgrade process called Berlin this platform has only exhibited slowness and costly transactions.
According to a report presented by Coin Metrics called Ethereum Gas Report, which analyzes this unique relationship between the network, its update and fees; it is pointed out that although Ethereum shows levels of investment attraction never seen before in its history, its Berlin update does not provide the relief that allows to alleviate the network's fee costs.
For Coin Metrics, the weight of Ethereum's average fees (US$ 10 in 2021) is the main reason for the price increase that ETH has registered in recent days, which at the same time makes gas more expensive. From January to today, ETH has risen 125%, considering the fact that in the process a correction of 19% was present after registering an all-time high of US$ 2,050, however gas during the same period, has presented an increase of 532%.
It is necessary to highlight the fact that depending on the type of transaction the system will apply the amount of gas it believes necessary, in this way a small transfer of an ERC-20 token will require less gas compared to a complicated operation involving a smart contract from a company dedicated to logistics, but according to the report the cause of the high gas rates lies in the multiplication of transactions on the platform, undoubtedly driven by DeFi.
Coin Metrics is blunt in expressing in its pages what: "Since January 2020, the amount of gas used per transaction has trended downwards. This shows that the increase in transaction complexity is not responsible for the high transaction fees." On the other hand the fact that ETH transactions are auctioned the ones with more gas weight tend to get the preference of the miners, therefore they get more speed, a situation that those transfers with little gas weight do not enjoy.
Likewise, the blocks work with difficulty when they are completely full (around 95%), a situation that has manifested itself throughout 2020 with the massification of DeFi. Since March of this year, the platform's blocks have been at their limit, exceeding 98%, which hinders the platform's functionality. CoinMetrics also exposes that the platform itself requires miners to specify the transactions they will include in the blocks which on average only support between 160 and 200 transactions per new block.
Of course, the miners' priority will always fall on the transactions with the highest gas, because they will obviously generate more economic income as these fall into their power. Likewise CoinMetrics concludes in its report that the EIP-1559 (Berlin) update will do little to change this network operation, even though it is designed to reduce gas costs and huge fees and assures that 'only scaling solutions will be the real long-term fix'. The report attributes Ethereum's tariff problem to scalability.
