Over the past week, the demand for NFTs has caused Ethereum gas fees to increase tremendously, with over 70,000 ETH burned on the 1st of May. However, the trading price of Ethereum continues to decline with other digital currencies in the market.
NFT Launch By Yuga Labs
Several Ethereum users were dissatisfied over the past week as a result of an NFT launch by Yuga Labs, which made ETH gas costs to spike. Yuga Labs, the company that created the immensely famous Bored Ape NFT collection, announced the release of a new land title series known as Otherdeed. This NFT collection is for its upcoming Otherside Metaverse, which is already gaining traction in the market.
Users can mint the NFTs with the company’s APE cryptocurrency, but ETH is also needed to cover the gas expenses associated with the production. As stated by Etherscan, the increased demand drove the estimated cost of a transaction on the Ethereum network to skyrocket to more than $400 at one point during the period. BitInfoCharts, a network cost tracker, stated that average costs peaked at about $200 on the 1st of May.
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Yuga Labs expressed regret for the disturbance to the Ether network and suggested a workaround. The company’s report stated that;
“Please accept our apologies for temporarily shutting out the lights on ETH. It becomes plainly evident that in order to fully grow, ApeCoin will have to move to a private chain.”
However, some observers in the industry noted that this event might have been prevented in the first place.
Benefits to Ethereum Users
Despite the rise in gas fees, the best part is that ETH transaction rates have swiftly dropped to their original price today, as Etherscan showed an average charge of about $3 for each transaction at the time of writing. Additionally, the network experienced inflation as the quantity of ETH used via the EIP-1559 mechanism reached its peak.
At the height of the demand, over 70,000 ETH, which is worth $200 million, were destroyed, pushing issuance into the deflationary zone by 18%. As stated by the result, the present burn rate for ETH is about 6,000 per day or approximately $17 million in value.
Money tracker projected that issuance would revert to a deflationary state after ‘the Merge’ ushers in PoS mechanism and the mining process ends, bringing the cryptocurrency back to its inflationary state. Otherdeed’s Non-Fungible Token minting has led to over 55,815 ETH being burnt, amounting to a stunning $160 million. NFTs have caused over 70% of ETH burning during the previous week.
The Price Of ETH Continues To Drop
The price of Ethereum fell to $2,740 at the end of April but has since recovered 2.4% in the last 24 hours, according to CoinMarketCap. As of the 2nd of May, the coin was trading for $2,860 a share. The price of ETH is now on a downward trend, having fallen by 17% over the last month and by 41% from its all-time record of $4,800 reached in November.
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