In a recent scenario of high transaction fees, a smart contract has just paid a 42 ETH gas fee which is worth over $113,000 for a single transaction.
According to on-chain data, this transaction which was confirmed today at 04:43:23 AM +UTC saw only 10 ETH worth $27,000 moved for the outrageous transaction fee. This means that the smart contract paid a fee that was four times the transaction itself.
The latest transaction fees have left many investors who hoped for reduced gas fees on the network after the Ethereum merger disappointed. Ethereum switched its consensus method from one that utilizes proof of work(PoW) to one that employs proof of stake (PoS). With the current consensus method, users would not need to pay a high transaction fee to speed up transactions.
Therefore, many are questioning the sense of transactions in which gas fees are higher than the actual transaction despite the upgrade.
However, a possible reason for the high transaction gas fee could be increased transactions due to price breakouts and the recent trend of Ethereum’s ERC-404 tokens. Earlier this week, these tokens experienced a significant decline, with its overall market capitalization plummeting by 29%.
High Transaction Fees Not New
Ethereum is well known for its high gas fee, as many similar past events are also in the records. Last year, an investor paid 64 ETH worth roughly $118,600 for a single transaction.
In a similar development in 2022, Coinfomania reported that an Ethereum user spent a transaction fee of about $350,000, and the transaction eventually failed. Also, an Ethereum user spent over $5 million on two transactions in which they transferred less than $100,000 in 2020.
However, It is important to note that hefty transaction fees are not only isolated to the Ethereum network. Last September, a sender of a Bitcoin transaction paid more than 19.8 BTC in gas fees to move 0.074 BTC between wallets, a transaction that cost him $500K.
Nearly all blockchains, like Ethereum, demand transaction fees in order to process any kind of transaction on their network; however, if a fee is too high, users may decide to look into alternative layer 2 solutions, such as Polygon and Arbitarum.
