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Last week, Uniswap launched its UNI token and set the crypto market ablaze with renewed interest in the DeFi project. The 400 free tokens essentially acted as a stimulus check, and as investors rushed to cash their “checks,” it brought Ethereum fees sky-high to a record nearly $1 million in a single hour.
What does this mean for Ethereum, and what does it say about the demand for Uniswap’s new DeFi coin?
UNI FOMO Drives ETH Gas Fees To Record One-Hour Highs
The DeFi trend has brought about flashbacks of the crypto hype bubble, where new projects were minted by the day and untold wealth was generated.
Two platforms central to this trend, Ethereum, which most projects are built on, and Uniswap, the platform where these tokens make their debut, have been topping charts recently.
Related Reading | Is Uniswap’s UNI Token Behind Ethereum’s 6% 24 Hour Surge?
Last week’s surprise introduction of the UNI token by liquidity pooling platform Uniswap caused Ethereum prices to surge as users bought up ETH to spend on gas fees to access the free tokens and cash them in. Those who paid the least were forced to wait up to as long as ten hours for transactions to complete, unless they forked over costly ETH fees.
UNI tokens were almost instantly worth nearly $3, and those who sold the DeFi tokens secured a stimulus check-comparative amount of free funds. Uniswap’s new coin eventually grew 150% due to the enormous interest in the token.
UNIUSD 150% 24 Rise Causes Ethereum Gas Fees To Skyrocket | Source: TradingView
Will Ethereum 2.0 Withstand The Next Uniswap Scenario?
Prices were surging even as those who just got their free tokens were selling them off. During the madness Ethereum also started to rally, driven by crypto investors buying ETH to fund expensive gas fees to claim their UNI tokens.
The frenzy also led to Ethereum breaking a record for the highest level of transaction fees within a single hour ever. The hourly total exceeded $900,000 according to Arcane Research.
The DeFi trend has put a spotlight on rising Ethereum gas fees. Users claim to have been deterred from transaction on the Ethereum blockchain as a result of the high fees.
Related Reading | Is Uniswap’s UNI The Crypto Version of a Stimulus Check at $3 Per Token?
Others compare Ethereum to the hottest night club in town, demanding high fees in order to get in. This night club, just saw its highest hourly demand ever, totalling just under $1 million in fees in 60 minutes.
Although the demand for UNI was a perfect storm of free money, FOMO, and a flashy new token from the hottest platform around, the sudden rise in demand was enough to cost Ethereum users a small fortune.
And with the way the DeFi movement is developing, this won’t be the last time Ethereum fees break such records, unless developers can finally introduce ETH 2.0 and take the platform by the horns.
Featured image from DepositPhotos, Charts from TradingView and Glassnode
