One of the leading lights in the crypto sector is undoubtedly decentralized finance (DeFi) that has seen a massive spike in its volume of total value from $1 billion to $59 billion just within a year. The interesting part of this is that the bulk of this volume is accounted for by the top 5 platforms in the sector with $24.33 billion.
Notably, Ethereum’s gas fees have been quite high due to the increased interactions between users and DeFi protocols, which are mostly hosted on the network of the second largest crypto asset by market cap. Since November last year, gas fees have been on the upside and it reached a crescendo last month when an average transaction was attracting a fee as high as $11.72.
However, these high gas fees have incredibly dropped in recent days especially as the amount of DeFi transactions have also seen a decline. Available data from Dune Analytics shows that trading volume on decentralized exchanges have steadily been dropping since reaching a high of $4.35 billion on February 23. As of March 3, the daily growth metric shows that the trading volume had dropped by almost 50%.
Connor Higgins, a data scientist with Flipside Crypto, noted that fees have significantly decreased in the last few days, but the cause of the fall can not be attributed to a cause. According to him, the high fees of February 23 were an outlier when compared against the overall average on a longer time span. In his words,
On average fees did fall, but it looks more like they are normalizing after a day of unusually high fees.
Ethereum gas Fees Remain High Because of NFTs
Regular users of Ethereum might notice that despite the drop in transaction volumes in DEXs, there has not been a significant decline in the gas fees. This could be because of the increased activities that non-fungible tokens (NFT) have seen in recent while.
In the crypto space presently, one dazzling sub sector that is the fancy of many crypto enthusiasts now is NFTs which have enjoyed wide patronage especially due to its ability to promote social discussion around subjects that are dear to the heart of players in the market. The industry has seen transactions worth well over $200 million since gaining the attention of the wider crypto space.