Crisis turns into opportunity! Ponzi scheme clogs Ethereum network, weekly average transaction fees hit post-2018 high

Ethereum transaction fees (Gas Fees) have been soaring since mid-April, with the average transaction fee now reaching around $0.5. Excluding the market crash in March, this price level has not been seen since March last year. The surge can be attributed to the massive trading volume of the ERC20 version of USDT and several well-known Ponzi schemes, including "MMM Financial Pyramid."

USDT, Ponzi Schemes Clogging Ethereum Network

Despite Bitcoin dropping below $9,000 after breaking the five-digit mark, the market trend post-halving remains uncertain. However, data from Etherscan shows that since April 15th, the average daily transaction fee on Ethereum has exceeded 500 ETH, with the past week averaging at 1,700 ETH.

According to ETH Gas Station, USDT based on the ERC20 version is the primary source of on-chain activities, followed by the notorious Russian Ponzi scheme "MMM Financial Pyramid", along with other schemes like SmartWay Forsage, Million Money 2.0, and Easy Club.

Crisis or Opportunity?

While the Ethereum network congestion may frustrate users and even disappoint long-term supporters, decentralized exchanges and DeFi projects like IDEX, Kyber, and dYdX still account for over half of on-chain transaction fees.

Many Ethereum developers believe that the high transaction fees imply Ethereum's potential as a financial settlement layer and could create an internally sustainable circular economy once Ethereum transitions to a proof-of-stake mechanism. Ethereum founder Vitalik Buterin tweeted:

Over the past week, Ethereum transaction fees have surpassed the estimated rewards for most PoS validation nodes. While the EIP 1559 proposal may temporarily alleviate high fees, the ultimate solution lies in improving Ethereum's scalability.

Ethereum core developer and Ethhub founder Eric Conner also noted on Twitter:

The Ethereum network generates approximately 1,900 ETH in transaction fees daily, equivalent to around 700,000 ETH in fees annually. With PoS locking up 10 million ETH, the annual issuance would be about 575,000 ETH. Coupled with Ethereum 2.0's fee burn mechanism, the final ETH issuance could potentially be negative.

EIP 1559 is a significant proposal to improve Ethereum transaction fees, aiming to reduce fee volatility and burn most of the ETH in transaction fees, which could impact the future issuance of ETH. However, based on historical trends, the rise in Ethereum transaction fees may be temporary. Additionally, the uncertainty of fee burning and other real-world factors could affect future ETH issuance. Therefore, the total circulating supply of Ethereum post Ethereum 2.0 launch will need further observation to determine if it decreases year by year.