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ethereum ethusd gloomy crypto uniswap defi
Nexo Logo

Soaring Ethereum Fees Could Cause A Gloomy Future For The Altcoin

Tony Spilotro by Tony Spilotro
2 years ago
in Cryptocurrency news, Ethereum
Reading Time: 3 mins read
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Ethereum has been a stand out star in the crypto market in 2020. Even with the recent over 15% collapse, the top-ranked altcoin is up over 200% year to date and 350% from the Black Thursday bottom.

Since then, though, Ethereum has taken on a completely new life, it seems, driven by DeFi and escalated by the surge in Uniswap tokens. But all this usage has clogged up the Ethereum blockchain and caused fees to reach unrealistic levels for everyday transacting. It’s caused some investors to avoid transacting in ETH at all, which could create a “gloomy” future for the smart contract focused cryptocurrency.

Ethereum Fees Reach Astronomical Levels, Discourage Usage of Cryptocurrency

The decentralized finance boom has propelled crypto back into the limelight and potentially a bull market.

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Each passing week a new DeFi token was soaring only further fueling the sudden surge of interest in the seemingly unstoppable trend. The DeFi market may have reached its boiling point after ERC-20 token swapping service Uniswap began listing a flurry of food-related tokens.

These fresh out of the oven DeFi tokens were farmed by Ethereum holders, but tokens like Hot Dog and Pizza were sold down to nearly zero.

The enormous appetite the market has had for these types of DeFi tokens has resulted in Ethereum fees reaching crippling numbers.

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Related Reading | Pizza & Hot Dogs: How Uniswap’s Profit Buffet Can Burn Crypto Investors

The demand for Ethereum only grew as these investors were forced to pay high gas prices if they wanted to get in on the hottest new token. Sadly, as they did, many got badly burned in the process – both by falling asset prices and by astronomical ETH fees.

The high fees have prompted several crypto community members across a wide range of credentials to speak out. One such individual, Blockfyre’s Simon Dedic warns that if ETH 2.0 doesn’t fix the outrageous gas prices, Ethereum’s future may be “gloomy.”

I spent like 800 USD in transactions fees for few trades today.

Furthermore, I lost around 10k USD when trying to sell today, because a tx with lower nonce didn’t go through for 3h.$ETH 2.0 has to come ASAP, otherwise I feel gloomy about its future..

— Simon Dedic (@scoinaldo) September 2, 2020

Why The DeFi Craze May Bring a Stormy, Gloomy Future To The Top Ranked Altcoin

Dedic isn’t alone. Several pseudonymous traders expressed their distaste in the situation and spoke of how they outright avoided making transactions because Ethereum fees are currently so high. Even Binance is cracking jokes on the subject on social media.

Although Ethereum has enjoyed a strong 2020 thanks to soaking up the DeFi limelight, things could turn dark on the altcoin extremely quickly.

The recent crypto market selloff has crushed just about any recently minted DeFi tokens and set Ethereum back nearly $100. And things may only just starting. With a high-risk presidential election ahead int he US, investors are de-risking into the dollar.

ethereum ethusd defi uniswap

ETHUSD Daily Potential Downside Targets | Source: TradingView

Making matters worse, losses are only worsened in these DeFi tokens, due to the requirement of swapping back into Ethereum before cashing them out directly. Because fees are so high, investors may be encouraged to sit in positions, leading to severe losses as these new tokens fall to nothing.

It’s the risk these crypto insiders apparently knew they were taking, but either was blinded by greed or simply didn’t care.

Related Reading | This Signal Says Ethereum Could Lead Alts Off A Cliff

Ethereum devs will need to find and implement scaling solutions quickly, or the future of the altcoin could be at risk. Plenty of platforms have been poised as the Etehreum-killer, but in the end, it could be death by suicide due to high fees during peak usage.

15$ Fees for 50 $USDT payment
🤢🤦‍♂️🤦‍♂️

The future of money 🙃
Wondering when this Uniswap shit will end😑 pic.twitter.com/x61j9c7BVD

— Feras_Y (@FeraSY1) September 3, 2020

It’s gotten so bad, that dollar-pegged stablecoins built on the Ethereum blockchain can cost nearly $15 just to send $50 in USDC or Tether. The fees alone destroy the use case of other assets built on Ethereum. And this could lead to an extremely gloomy future for Ethereum.

Tags: altcoincryptoDeFiETHethbtcethereumethusdETHUSDTfeesGasUniswap
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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