In the past 24 hours, the XEN token has generated a great deal of buzz in the crypto community. The return of some volatile meme coins caused Ethereum (ETH) gas fees to increase by a staggering 73%. In the past week, Ethereum gas fees surpassed their 10-month high.
Some meme-based cryptocurrencies captured the crypto community’s attention the past week. According to a software engineer on Twitter with the handle @Cygaar, the recent increase in gas fees on the Ethereum network is largely attributable to the XEN token. He noted that the token utilized up to 90% of the gas per block for single transactions.
XEN token accounts for more than 15% of ETHs gas fees
XEN coin is an ERC-20 currency that was introduced in October 2022 and accounts for around 15% of all Ethereum gas expenses. XEN gas expenditure began to raise concerns near the end of 2022. XEN token gas was four times that of all Layer-2 networks in December 2022 and 20% greater than that of OpenSea, the largest NFT marketplace.
Interestingly, the first time ETH supply turned deflationary was in October, when the XEN token was launched. While XEN has contributed to the gas price surge, other factors have played a part in the ongoing price circus. Memecoins have taken the lead.
These extremely volatile assets were primarily transacted on the Arbitrium [ARB] network in exchange for ETH. Due to increased network resource consumption, IntoTheBlock data indicates that Ethereum earned $66.7 million in gas fees during this period.
It is important to note that the increase in Ethereum network traffic could lead to congestion and higher transaction validation fees. Even though memecoins are viewed as high-risk investments prone to sudden price increases and decreases, many have recently demonstrated remarkable performance.
Although the momentum slowed, the increase suggests that a substantial quantity of ETH was used in transactions during the previous week. However, the average quantity of gas used has also decreased significantly.
The average quantity of gas consumed for transaction validation has decreased to 43.99 Gwei, according to data from Santiment. This demonstrates the traders’ reluctance to exchange ETH for other cryptocurrencies.
Moreover, Glassnode announced on April 23 that the average gas price for Ethereum had attained a 10-month high. During periods of increased demand for cryptocurrencies, ETH gas prices have risen on multiple occasions in the past. Consequently, the cost for the average user rises to prevent network congestion.
What’s the solution moving forward?
Cygaar subsequently emphasized the significance of EIP-4844 and Layer 2 protocols for scaling Ethereum. According to him, such implementations would prevent instances in which a single program is responsible for driving up gas costs for all other network users.
In addition, Cygaar cited a report describing the EIP-4844 upgrade as a viable solution for reducing gas fees on the Ethereum network. According to the report, the upgrade will include data availability rollups that reduce transaction fees and increase transaction throughputs. This would herald a new era of low-cost on-chain activity.
What is EIP-4844: EIP-4844 has been proposed as a stopgap measure to address the issue of Ethereum’s excessive gas fees. The EIP 4844 proposal aims to establish a “stop-gap” solution to alleviate the network of the ever-growing number of transactions by adding approximately 2 MB of space to the blocks.
This version attempts only to introduce the format that will be used for sharded data without sharding the data itself. The proposal was scheduled to go into effect after the Shanghai upgrade.
How can EIP-4844 benefit users?
EIP-4844, also known as proto-danksharding, is a proposed Ethereum protocol enhancement that aims to reduce transaction fees and boost transaction throughput. It plans to accomplish these goals by introducing a new transaction type that admits “blobs” of data.
EIP-4844 is proposed as a transitional solution because deploying data sharding is a lengthy and complex process. As a result, it will prepare Ethereum for full danksharding, which will reach approximately 100,000 transactions per second (TPS) without compromising decentralization or security.
EIP-4844 is anticipated to be implemented in the second half of 2023, but delays are possible. Ben Edgington, an Ethereum contributor, summarizes EIP-4844 with the memorable alliterative phrase, “EIP-4844 bolts blobs onto blocks.” It describes concisely how blob-carrying transactions include “blobs” attached to blocks, thereby increasing the amount of data that blob-carrying blocks can manage.
This may be confusing because it appears to be equivalent to expanding block sizes, which contradicts Ethereum’s stance against arbitrarily huge blocks, which would necessitate more computational power and might thus lead to centralization. However, there are some important distinctions between blockspace and blobspace.
Users will see considerable improvements following the introduction of EIP-4844, mostly in the form of faster transactions and lower fees. The successful implementation of EIP-4844 will help strengthen Ethereum’s position in the cryptocurrency market.
Ethereum price drops
In the meantime, the recent volatility in the price of Ethereum indicates an ongoing adverse market trend. Due to an increase in bearish sentiment, the ETH/USD pair has declined significantly over the past week, reaching $1,850. The coin is presently trading in a bearish zone and will likely experience additional short-term pressure.
The selling pressure intensified as soon as the ETH/USD pair dropped below the psychological $1,880 barrier. This level initially provided solid support, but buyers were unable to maintain it, and the price fell below $1,850.
At $1,842, analysts observe tremendous support for the ETH/USD pair. If this level fails to hold, the coin is expected to continue falling and attempt its next support at $1,800.Technical analysts believe that there is immediate resistance near the $1,900 region.
