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Gas fees on the Ethereum network have surged significantly, reaching an eight-month-high amid increased demand for an experimental token standard tagged ERC-404.
While several factors must have contributed to this surge, the most prominent cause was the hype around ERC-404 tokens, Pandora, and DeFrogs.
Ethereum Gas Fees Hit New Peak Level in Months
On February 9, the Ethereum network gas fees peaked at an average of 70 gwei, according to data from Etherscan. This is equivalent to $60 for a standard transaction. The gas costs reached a high of 377 gwei, marking a new peak since May 12, 2023. Several factors could be attributed to the cause of the gas fee surge.
However, the increase occurred amid the growing demand for the ERC-404 token standard throughout the crypto sector. The hype and popularity of the ERC-404 token standard grew following the launch of the Pandora project on February 5.
Notably, Pandora recorded a significant price increase of over 6,100%, with its trading volume surpassing $474 million.
In context, ERC-404 was developed to enable fractionalized ownership of NFT by binding ERC-721 non-fungible tokens (NFTs) to ERC-20. Through such functionalities, they allow the ownership of a part of a single NFT by multiple wallets.
Also, the wallets could use their portions each to trade or stake for loans. However, the token is still unofficial despite the prefix ‘ERC’ in the new tokens.
Also, the developers of Pandora are still actively working on enhancing the project. They aim to optimize the gas costs related to ERC-404 transactions by reducing fees between 300% and 400%.
The team noted that gas price optimization is essential to the broader acceptance and adoption of the token.
Growing Need for Gas Cost Optimization
Many crypto community members have reacted to the outrageous surge in gas fees. A pseudonymous X user, Pop Punk, and the co-founder of gas-auditing company Gaslite reacted to the high gas usage of an ER-404.
According to Pop Punk, the token consumes more than three times the equivalent quantity of gas an average NFT transaction needs.
The user stated:
An average ERC404 transfer is 125,000 gas units. More than 3x the gas of an average ERC721A transfer. This is nightmare fuel.”
An average ERC404 transfer is 125,000 gas units.
More than 3x the gas of an average ERC721A transfer.
This is nightmare fuel.
Gaslite could either:
1) build a more optimized (and more compliant version of this standard)
2) ignore it and let it fade into the ether— Pop Punk (@PopPunkOnChain) February 6, 2024
Notably, the massive trading volumes from projects like DeFrogs and Pandora fueled the surge in gas usage. Data from Birdeye shows their collective volume amounted to over $600 million within the past week.
The overall trend underscores the increasing demand for innovative token standards.
It also emphasizes the need for scalability and gas optimization on the Ethereum network. The trend reveals the need for developers to explore lasting solutions that will improve the adoption of DeFi applications.
The focus remains on promoting user experience through gas price optimization.
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