Will Ethereum's Demand Grow as A Result?
The DeFi craze seems to be ongoing and shows no sign of stopping. This can be seen in DEX's outranking popular centralized exchanges, lending protocol tokens growing, and "yield farming" breaking into mainstream cryptocurrency consciousness.
As per DeFi Pulse, there is over $2.85 billion locked into the DeFi ecosystem. With DeFi in such demand, it was a matter of time until it affected Ethereum (ETH) in one way or another.
ETH and Growing Gas Fees
According to Glassnode, Ethereum's gas fees are reaching and maintaining highs levels above $4 or roughly 40 gwei. While ETH had unusual spike in gas on the 11th of March earlier this year, it did not maintain these levels for long. It has been claimed that that spike was possibly due to DeFi & Uniswap.
Many more DeFi protocols have launched since, including Compound, Curve, and Balancer and have become popular with traders and yield farming. Seeing DeFi's massive demand it was a matter of time until the ecosystem would affect Ethereum and gas prices.
This could help bolster ETH's price as it is required for the gas fees needed to exchange different tokens.
Complaints About Gas Fees
As Ethereum's gas fees are reaching and maintaining high prices, some yield farmers and traders are not very happy with the fees. This can be seen in multiple tweets, most notably Brad Mills a podcaster.
ETH fees are insane right now.— Brad Mills 🔑 (@bradmillscan) July 19, 2020
$21.75 gas free for using @1inchExchange to swap some USDC for some random DeFi FOMO token.
Remember folks, when you make your 10X, sell back to #Bitcoin!
Shitcoins have the fomonomics, Bitcoins have the fundamentals. pic.twitter.com/SI3bQb82dI
While a $21 fee is rather high and unusual with most transactions averaging around $4-5, fees are still high. This is essentially a bullish sign for Ethereum that could push it higher above its current range of around $250 should DeFi continue to grow in popularity.
With DeFi still in its early stages it is rather easy for Bitcoin maximalists to dismiss the decentralized finance movement. Time will be the ultimate judge of things and should it continue to grow, it will benefit Ethereum in the long run.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado