Vitalik Buterin, the founder of Ethereum blockchain, on September 2 began explaining the reason behind the huge gas price/ transaction fee on the Ethereum blockchain. He stated that gas prices on the Ethereum blockchain are like auctions where bids are made. The highest bid gets accepted. Transactions with the highest fees are processed first. This means that in a situation where there are many transactions waiting to be confirmed, there will surely be a hike in the gas price just like demand and supply:

“So what would happen? There would be more demand than there is space, so people would start bidding higher and higher txfees. How high would txfees go until enough people drop out that the remaining users make up only 12.5 million gas? Well, we know the answer: 465 gwei.”

He identified that any solutions released by Devs now are only temporary. As revealed by EthGasStattion.info, Uniswap contributes most in transaction fees followed by many other Decentralized Finance protocols. This is no surprise as DeFis has been the buzz word for the past few months. Centralized Exchanges seem to be the ones taking the most fire as they process huge Ethereum-based transactions per day. Changpeng Zhao, CEO of Binance stated in a tweet:

“The high ETH network gas fees is causing problems for most exchanges, running with $10-20 loss on each withdrawal… Will have to adjust our withdrawal fees sooner or later.”

Centralized exchanges advise their users to process transactions on other blockchains. For example, USDT can be processed on the Tron blockchain rather than on the Ethereum blockchain. Because of the high transaction fees, Tron Blockchain has become a safe haven for DeFis. The coin has since moved up in coin ranking, overtaking EOS.  David Gokhshtein (@davidgokhshtein) opined:

“If @VitalikButerin doesn’t fix the current issues hampering #Ethereum, be prepared to see a lot of projects switch over to #TRON network.”

In his statement on how to mitigate the high transaction fee problem, Vitalik Buterin concluded:

“Conclusion: the only solution to high tx fees is scaling. Tether, Gitcoin and other apps are doing the right thing by migrating to ZK rollups today. I’m excited about the soon-upcoming optimistic rollups that will generalize rollup scaling to full EVM contracts.”

It seems the only hope for Ethereum enthusiasts is ETH2 which is still undergoing tests and to be expected in months to come. Alternatively, Ethereum developers could switch over to a constant transaction fee model. This may reduce the transaction fee but there will be transaction clogging because of the congestion. 

What do you feel is the solution to Eth high transaction fee