The surge in gas fees on Ethereum’s Layer-2 solution, Polygon, proved to be a significant event, experiencing an extraordinary increase of over 1,000% and reaching a peak of $0.10. This surge was primarily attributed to heightened transaction activity related to the minting of tokens known as POLS, inspired by the Ordinals protocol. Polygon founder Sandeep Nailwal expressed his surprise at the heightened network activity, speculating that it could be linked to the launch of a new Polygon-based nonfungible token (NFT) collection.
Polygon gas fee experiences a 1,000% surge
The remarkable increase in network activity and the subsequent spike in gas fees were fueled by the enthusiastic minting of the new POLS token. Dune Analytics data revealed a rush of minting activity for POLS coinciding with the use of over 102 million MATIC tokens, valued at $86 million, as gas. POLS operates on a protocol called PRC-20, which operates similarly to the Bitcoin Ordinals-derived BRC-20 token standard. According to data from Ethereum Virtual Machine provider EVM, only 8.7% of the total POLS supply had been minted at the time, with just over 18,100 owners claiming the token.
As of the latest available information, Polygon gas fees have returned to typical levels, settling at around 882 gwei. Gas fees represent the computing effort required to execute a transaction on a blockchain, with 1 gwei approximately equal to 0.000000001 MATIC. A similar situation unfolded on the Bitcoin network in May, marked by a prolonged spike in activity following the release of the Ordinals protocol. This protocol allowed users to mint NFTs directly onto the Bitcoin blockchain. The ensuing craze for Ordinals NFTs and BRC-20 tokens led to Bitcoin fees reaching levels not observed since April 2021.
Lessons from Bitcoin Ordinals frenzy and fee surge
Some prominent figures within the Bitcoin community, including Samson Mow and Adam Back, criticized the Ordinals protocol and token standard, denouncing them as wasteful. Samson Mow expressed skepticism about the sustainability of the hype surrounding Bitcoin Ordinals and BRC-20 tokens, emphasizing the massive fees being paid to Bitcoin miners. He predicted that this trend would fade away in a matter of months, questioning its viability over the long term. The growing activity around Ordinals and BRC-20, a crypto technology enabling users to mint both fungible and nonfungible tokens on the Bitcoin blockchain.
The technology was identified as the primary factor causing the spike in transaction fees and subsequent congestion of the Bitcoin network. The surge in gas fees on Polygon, driven by the fervor for minting POLS tokens, mirrors a similar trend observed on the Bitcoin network with Ordinals NFTs and BRC-20 tokens. Both instances highlight the challenges and debates surrounding the sustainability and efficiency of certain blockchain protocols and token standards, emphasizing the dynamic nature of the cryptocurrency landscape.
