Ethereum gas prices have set new records, with single DeFi transactions costing over $10 in fees. High fees are the result of congestion, as users pay ever higher fees to ensure their transaction gets into a block. As DeFi takes off, the price of gas on Ethereum threatens its future. Or does it?
Is the Party at Vitalik’s House?
Gas on Ethereum can be seen as “block space rent” and many are saying the rent is too damn high. That depends on who you ask, though. Even a $10 fee is a small fraction of many DeFi trades, as speculators are by definition those who have “money to burn.” For the moment at least, DeFi is a market that exists on Ethereum. If you have profitable trades to make on DeFi, then gas is simply another cost of doing business, since there is no other way to make the trade.
This is why high gas prices don’t cause Ethereum leaders and boosters to lose sleep: the very fact of high gas prices only serves to amplify the message that Ethereum is the only game in town. It’s certainly true for DeFi today, but it can also translate to the perception of Ethereum as the only platform for smart contracts. Why go anywhere else when gas prices prove that the party is at Vitalik’s house?
Gas prices go up as Ethereum gets more congested, and while the current rate is eye-poppingly high, congestion on Ethereum is nothing new. In late 2017, CryptoKitties was a collectibles game new to Ethereum that exploded in popularity and instantly caused the entire network to slow to a crawl. Non-CryptoKitties transactions such as entire ICOs went from minutes to hours and even days for completion.
For dApp developers and projects this was, and still is, extremely worrisome. If gas prices are block rent, immediacy — the ability to transact in some predictable amount of time — is an arbitrary popularity contest. If you are the developer of an application that provides a time-sensitive service to a minority of Ethereum users, you can find yourself waiting behind a deluge of transactions to serve the latest craze, simply because it is attracting more users than your app. It doesn’t matter that those users represent an entirely different market: your app will still lose based on numbers alone.