Ethereum (ETH) gas fees have been moving higher in recent months as the non-fungible token (NFT) market continues to grow. Despite the bear market that cryptocurrencies experienced in 2022, things are starting to change in 2023. This can already be seen on Ethereum and the fees that users are paying have been growing for months according to BitInfoCharts.
Ethereum Gas Fees Move Higher
Ethereum, the second-largest cryptocurrency in the market and one of the most popular blockchain networks in the world, has seen its average transaction fees grow in recent months. According to data shared by BitInfoCharts, ETH transaction fees have surged by almost 4 times between December 2022 and February 2023.
As you can see in the chart below, there has been a clear upward trend since December 2022. ETH fees have surged from close to $2 to even $8 per transaction. One of the main reasons behind this surge and expansion of ETH fees could be related to the NFT market, which has rebounded in recent weeks.
According to data shared by Glassnode, the incremental nature of the gas demands shows that there could be a new resurgence of network activity for Ethereum. This could be seen in other blockchain networks as well, which means that investors and users are trying to get the advantage of using new solutions linked to decentralized applications (dApps) or other NFT applications.
Another thing that is worth taking into consideration is related to the fact that when Ethereum fees move higher, this offers the possibility of other blockchain networks expanding and attracting new individuals and users. This happens as users require lower transaction fees in order to be able to do what they desire without overpaying fees.
According to data shared by CoinGecko, there are many other blockchain networks that could be used and that became some of the largest networks in the market. Polygon (MATIC), Cardano (ADA), and Solana (SOL) are just some of the most popular blockchain networks that can offer users the possibility to engage with non-fungible tokens, dApps and other DeFi solutions.
Despite that, other blockchain networks have experienced congestion issues. If the interest for NFTs and other dApps continues to grow in the coming months, we could see fees going even higher. Let’s not forget that fees on the Ethereum network surpassed during certain periods $20 or even $50 per transaction, making the network almost unusable for users.
NFTs and DeFi Markets
But let’s get into the details of the NFT and DeFi markets in recent years. Non-fungible tokens, or NFTs, have become a hot topic in the world of crypto and beyond. Unlike other crypto assets, however, NFTs represent something unique and indivisible, such as digital art, music, or other collectibles. This has made them a popular choice for artists and creators who are looking to monetize their digital content in new and innovative ways.
DeFi, or decentralized finance, is another rapidly growing market in the world of crypto. DeFi refers to a wide range of financial applications and services that are built on blockchain technology, which allows for trustless, peer-to-peer transactions.
These services include everything from lending and borrowing platforms to decentralized exchanges and stablecoins. One of the key benefits of DeFi is that it allows for greater financial inclusion, as anyone with an internet connection can access these services without the need for a traditional financial institution to intermediate.
In recent years, we’ve seen the worlds of NFTs and DeFi begin to merge. One example of this is the rise of NFT-based lending platforms, which allow users to borrow against their NFT assets. These platforms use smart contracts to automatically execute loans and repayments, without the need for intermediaries such as banks.
Another example is the emergence of NFT-based marketplaces that allow users to buy and sell NFTs using cryptocurrencies such as Ethereum. These marketplaces often include built-in decentralized exchanges, allowing for seamless transactions without the need for a centralized exchange.