Ethereum gas fee rises – Here’s why Binance could be the reason
- Gas fees on Binance jumped to 530 ETH within a few hours of transactions.
- Network activity increased on Ethereum and the exchange was also surprised by the sudden spike.
Without warning, gas fees on the Ethereum [ETH] mainnet jumped from 10 to about 300, according to data provided by Dune Analytics. Higher ETH transaction fees could be caused by an overwhelming level of user activity on decentralized Applications (dApps), or periodically increased trading on Decentralized Exchanges (DEXes).
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However, Dune’s data revealed that neither of the scenarios mentioned above was the major cause this time. According to the crypto data tool, the hike in gas fees could be linked to the large number of transfers on Binance.
An assessment of Dune’s Binance dashboard showed that 145,500 addresses were involved in depositing ETH on 21 September alone. Transactions made by these addresses incurred gas fees worth 530 ETH.
— PeckShieldAlert (@PeckShieldAlert) September 21, 2023
Meanwhile, Binance responded to the issue, noting that it was undergoing a wallet aggregation process before the sudden spike. It also mentioned that the surge was a surprise to the exchange too as it only began the aggregation procedure to ensure the safety of users’ funds.
More transfers, more gas
Furthermore, Glassnode’s data showed that the transfer rate on the Ethereum network increased significantly. This metric is the total amount of transfers per second. But it only counts successful non-zero transfers, not non-numeric ones.
At the time of writing, Ethereum’s transfer rate was 6.53, reinforcing the claim by Dune that there was a high number of transactions going on the Binance exchange.
On-chain data from Santiment also confirmed the increase in gas fees. However, the on-chain analytic platform provided exact details on the average gas used. As of this writing, the average gas used on Ethereum, measured in gwei, was 12.43.
This value was the highest the Ethereum network had seen since 11 September. As per active addresses, Santiment also revealed that there was a sudden increase in the metric.
Active addresses measure the number of unique addresses participating in the transfer of assets within a network.
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At press time, active addresses on the Ethereum network had risen to 537,000. The surge also reflects successful participation in transactions, indicating how users on Ethereum have been impressive.
As it stands, market participants are hoping that the gas fees will decrease. If not, there could be a massive plunge in demand for ETH, followed by a dearth of network activity.