Key Points
The gas price per transaction on Ethereum (ETH) has recently soared. This is reminiscent of the memecoin frenzy in May 2023. In the last 24 hours, ETH has seen a minor price drop, falling below $2,800.
ERC-404 and the Rise in Transaction Costs
The rise in Ethereum’s transaction costs can be attributed to the experimental token standard ERC-404. According to IntoTheBlock, an on-chain analytics firm, Ethereum’s network amassed $84 million in gas fees over the past week. This represents a 61.5% increase from the previous week.
On February 9th, the average gas price per transaction rose to 71 Gwei. The last time such levels were observed was during the memecoin frenzy in May 2023, which saw the emergence of the Pepe (PEPE) token.
This surge in gas prices occurred after the launch of Pandora, the first functional ERC-404 project. The demand for Pandora has been high recently. The Pandora token has seen a 270% increase since its launch, according to CoinMarketCap.
ERC-404 is a unique token standard. It merges the features of ERC-20 (fungible tokens) and ERC-721 (non-fungible tokens). Therefore, tokens under this standard can be both fungible and non-fungible simultaneously.
A notable feature of this not-yet-official token standard is that it can be fractionated. This allows multiple users to collectively own a single NFT. An anonymous user named PopPunk, who is also a co-founder of a gas auditing firm, stated that an average ERC-404 transaction requires three times the gas needed for an average NFT transaction. This clearly shows that ERC-404 tokens are expensive for users.
There has also been a significant increase in daily on-chain transactions over the past week, up by 17%. Around 1.15 million transactions were settled on February 16th, the highest for the month.
At the time of writing, the second-largest cryptocurrency was trading at $2,790, according to CoinMarketCap. ETH has seen a minor retracement in the last 24 hours, falling below $2,800.
The overall market sentiment is one of “extreme greed”, according to the Ethereum Fear and Greed Index. This suggests a significant level of FOMO among market participants.
