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How memecoins helped Ethereum’s transaction fees

2min Read

The fee spike also accelerated the rate at which ETH was moving out of circulation.

How memecoins helped Ethereum's transaction fees to surge

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  • Ethereum’s weekly fees hit a 22-week high on the meme coin hype.
  • ETH’s supply on exchanges increased, prompting concerns of a correction.

Ethereum’s [ETH] bullish run on the price charts brought it to $3,949 at press time, setting it for a likely breach past the magical mark of $4,000.

The second-largest cryptocurrency was up nearly 15% over the week, according to CoinMarketCap.

The soaring prices got traders excited, as daily trading volumes hit multi-year highs of more than $20 billion, as per crypto market data provider Kaiko.

Ethereum blockchain gets busy

Apart from the impressive show in the market, the blockchain was also experiencing heightened demand for its blockspace.

According to on-chain analytics firm IntoTheBlock, Ethereum validators collected over $190 million in fees over the week, the highest since May 2022, representing an increase of 78% from last week.

With this, Ethereum’s annualized fee rate surged over $10 billion for the first time since early 2022.

Ethereum daily fees

Source: IntoTheBlock

The high network demand was attributed to the ongoing meme coin bull market.

Top Ethereum-based coins such as Pepe [PEPE], Shiba Inu [SHIB], and Floki [FLOKI] have been pumping this week, as retail investors returned to the cryptocurrency market.

ETH burn rate spikes

The fee spike also accelerated the rate at which ETH was moving out of circulation. Note that a set amount of ETH is burned for each transaction.

This corresponds to the minimum amount required for a transaction to be considered valid, i.e., base fee.

According to AMBCrypto’s analysis of ultrasound.money data, more than 33K ETH were burned over the week, taking the annual deflation rate to 1.45%.

Ethereum deflation rate

Source: ultrasound.money

As per the supply-demand factors, such deflationary pressure might have a positive impact on ETH’s long-term economic dynamics.


Is your portfolio green? Check out the ETH Profit Calculator


A cause for concern?

ETH’s rapid price gains over the week pushed the total supply in profit to over 95%, as per AMBCrypto’s analysis of Santiment data.

Interestingly, nearly 320,000 ETH coins were transferred to exchanges in the week. This raised alarms that traders might look to profit-take in the days to come, causing a correction.

Ethereum profitability

Source: Santiment

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Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.
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