Transaction fees or ‘Gas’ on Ethereum (ETH) have been on the rise in the first three weeks of November as decentralized finance-related (DeFi) activity on the blockchain is starting to gain momentum, read a report by blockchain data analytics firm Kaiko.
Analysts at Kaiko noted that the primary source of the rising gas fees was the Ethereum-based decentralized exchange (DEX) Uniswap (UNI). The platform experienced a surge in transaction volumes of meme coins over the course of the month, which has pushed the block space demand much higher, increasing gas fees. As a result, the average gas fee on Ethereum reached a two-month high last week.
Ethereum Gas Fee Hit Two-Month High As DeFi Transaction Volumes Rise
As of November 20, the average cost of performing an ETH transaction is 45.13 Gwei, or $1.5. The same transaction would have cost 24.84 Gwei ($0.94) the previous day. This is a nearly 100% increase from October when sending a transaction on Ethereum cost just 17.66 Gwei ($0.65).
Gas fees still remain volatile but are generally higher in November compared to last month. There is a direct correlation between gas fees and how ETH tokens and DeFi platforms perform on the market. When DeFi trading and non-fungible token (NFT) minting activities are on the rise, gas fees are guaranteed to expand.
The latest surge in transaction charges could be an indication that the Ethereum market is preparing for a rally, and could be largely beneficial to leading Ethereum-based DeFi platforms like Uniswap (UNI), and Aave (AAVE).
According to on-chain aggregator DefiLlama, the total value locked (TVL) across all DeFi protocols stood at $46.6 billion as of November 21. The TVL has risen nearly $5 billion over the course of the month and is up from $37 billion in October. Ethereum is responsible for managing more than half of this TVL at $25.4 billion, while Uniswap is considered to be the largest protocol in the DeFi sector with $8.66 billion in TVL on its trading platform.
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Uniswap (UNI) Could Retest 2023 Peak If Bulls Can Break Above The November High
At the time of writing, UNI is trading at $5.36 – up 4.5% in the last 24 hours. The token’s prices are up nearly 30% from October. However, bulls are struggling to break above the November high of nearly $5.6. Although UNI is moving towards the upside, daily trading volumes and network participation seem to be tampering with its price.
Experts say this formation on the price chart suggests that the token’s uptrend was following low momentum and sustainability. They expect UNI to make more gains if there is a solid close above November highs with expanding trading volumes on its DeFi protocol. If that is the case, Uniswap could retest 2023’s highest valuation of around $7.2.
Meanwhile, AAVE is trading at $89.51 – down 0.3% in the last 24 hours. With a TVL of $5.63 billion, the DeFi protocol has seen its token’s price rise by 7% since October. Ether (ETH) is trading at $2,005 – down 0.5% from the previous day. The second-largest cryptocurrency by market capitalization has surged by 20% over the course of 30 days.
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