Ethereum [ETH] fees spike thanks to this mysterious project

• VMPX, a new project was largely responsible for the increase in ETH fees.
• Market participants are concerned about the real utility of the token.

Fees generated by the Ethereum [ETH] blockchain increased by 57.8% between 3 July and the time of writing. The data, which was shared by IntoTheBlock, showed that the second-largest blockchain made $47 million within the said period. 

How much are 1,10,100 ETHs worth today?

When Ethereum fees increase, it means that the network had experienced high volatility and a high level of traffic. Additionally, it implies that smart contracts have consumed gas due to consistent execution. 

And this is usually because some smart contracts can be very complex and require a lot of computation. However, the main driver of this demand in ETH-related transactions was rather surprising.

Stunned at the newbie

The blockchain insight platform mentioned that VMPX [VMPX] contributed a whooping 18% to the fees. 

Ethereum fees spiked by over 50% this week, with a new, suspicious token $VMPX making up 18% of the gas consumption per @ultrasoundmoney pic.twitter.com/Tdt86oyW2U

— IntoTheBlock (@intotheblock) July 7, 2023

VMPX is a newly-launched cryptocurrency that operates as an ERC-20 and BRC-20 token. According to its official website, VMPX notes that it serves as a bridge liquidity token connecting the Bitcoin [BTC] and Ethereum [ETH] blockchain. The project noted,

The ultimate objective of the VMPX token is to facilitate seamless swaps between BRC-20 and ERC-20 tokens across the Bitcoin-Ethereum bridge. Furthermore, VMPX token holders can convert their tokens to XN native coins on the X1 blockchain using a smart contract.

Taking the largest share in ETH burned meant that VMPX was able to override the likes of Uniswap [UNI] and Arbitrum [ARB], known to be the top contributors.  On 6 July, the project’s founder Jack Levin shared that VMPX had a gas mint action. According to him, the activity produced $7 million with 4,500 participants. 

$VMPX gas mint auction. $7M worth, 4,500 holders. Credit: @jarosciak pic.twitter.com/XBSzNuKLh2

— Jack Levin ??? (@mrJackLevin) July 6, 2023

However, a pseudonymous software developer 868system replied to Levin that VMPX’s demand was “purely artificial.” This prompted a discussion about the exact use case of the project. 868system pointed out,

The demand for gas was artificial and purely theatrics. You put a for loop in there that does nothing but waste computing resources.

Congestion is back down

Regardless, Santiment showed that Wrapped Ethereum [WETH] accounted for the highest in terms of distribution. This did not come as a surprise, especially as VMPX requires a WETH exchange to process transactions.

Source: Santiment

Realistic or not, here’s VMPX’s market cap in ETH terms

However, the increase experienced in ETH fees up until 5 July has slowed down. At press time, ETH fees burnt had fallen to $682,000. This meant that congestion on the Ethereum network had reduced. Also, the decline infer that the initial surge in demand was no longer present.

Source: Santiment

At press time, VMPX’s price was $0.07. However, its 24-hour to seven-day performance has been underwhelming. This was in contrast to its earlier performance which produced a 50% 30-day hike.