ALRIGHT TAKING A LOOK AT CRYPTO RISING NOW, WHERE EVERY WEEK WE TAKE A DEEPER DIVE INTO
THE CURRENT CRYPTO LANDSCAPE, LOOKING INTO THE OPPORTUNITIES AND CHALLENGES AHEAD.
NOW, ACCORDING TO DATA FROM BIT-INFO CHARTS, LAST WEEK SAW ETHEREUM GAS FEES HITTING THEIR LOWEST
LEVEL SINCE AUGUST 2021, BUT WHAT TRIGGERED THE FALL AND WHAT DOES IT MEAN FOR INVESTORS?
JOINING US IS ANNABELLE HUANG, MANAGING PARTNER OF AMBER GROUP. IT’S GREAT TO HAVE YOU ANNABELLE.
IT'S GREAT TO BE HERE AS WELL
SO ANNABELLE, THERE ARE MANY POSSIBLE REASONS WHY GAS FEES ARE SO LOW -
THE TUMBLE IN CRYPTO MARKETS TRIGGERED BY THE CONFLICT IN UKRAINE AND INFLATION CONCERNS,
WANING INTEREST IN NFT’S OR INCREASED COMPETITION IN THE FIELD WITH THE RISE OF
ALTERNATIVE PLATFORMS OFFERING THE SAME SERVICE AT LOWER COSTS. WHAT ARE YOUR THOUGHTS?
SO AT A TIME THAT WE'RE SPEAKING RIGHT NOW,
THE ETHEREUM GAS FEE HAS DROPPED DOWN TO AROUND 50 GWEI OR LESS THAN US$2 IN TERMS OF TRANSACTION
FEES FOR THE VERY SIMPLE TRANSACTIONS - A LEVEL THAT WE HAVEN'T SEEN IN A LONG TIME.
I DO AGREE THAT IT'S A RESULT OF ESSENTIALLY THE MARKET DOWNTURN TRIGGERED BY A LOT OF
MACRO FACTORS, SUCH AS THE GEOPOLITICAL CONFLICT AND A LOT OF THE MACRO ACTIONS BY THE FED.
AS A RESULT, THE ON CHAIN ACTIVITIES HAS DIED DOWN QUITE A BIT. IN TERMS OF DEFI ACTIONS. WE
CAN SEE FROM THE TOTAL VALUE LOCKED, AND THE TRANSACTION VOLUMES ON DIFFERENT DEXS AS WELL
AS IN NFT’S. WE'RE SEEING AN ACROSS THE BOARD 30 OR 40%
DECREASE IN ALL THE ON CHAIN ACTIVITIES WHICH RESULTED IN THE LOW GAS FEE.
NOW, YOU MIGHT EXPECT A FALL IN GAS FEES TO TEMPT TRADERS
BACK INTO MAKING TRANSACTIONS THAT ARE SEEN AS GAS HEAVY,
LIKE BUYING AN NFT ON OPENSEA OR TRADING ON UNISWAP, SO ARE WE SEEING IN INCREASE
IN THE NUMBER OF DAILY USERS ON THE ETHEREUM NETWORK, AND IF NOT, WHY NOT?
“I DON'T THINK WE ARE SEEING THAT BECAUSE
IN FACT, I THINK GAS FEE IS A FUNCTION OF THE SUPPLY-DEMAND FOR BLOCK SPACE ON CHAIN,
WHICH IS A FUNCTION OF THE USER DEMAND FOR DIFFERENT ACTIVITIES ON CHAIN -
BECAUSE OF THE PRICE CORRECTION. AND I THINK THERE HAS BEEN A LOT LESS ACTIVITY
HAPPENING. PEOPLE HAVE LESS DEMAND TO TRADE, TO BUY THINGS, EITHER DEFI TOKENS OR NFT’S,
WHICH IS THE REASON WHY GAS FEES HAS DROPPED. NOW, WITH GAS FEE AT AN ALL TIME LOW, SOME OF THE
USERS MIGHT START TO DO A FEW OF THE TRANSACTIONS THAT HAVE BEEN WAITING, GIVEN THE COST IS LOWER.
BUT I WOULD SAY THE BROADER MARKET DEMAND HAS DECREASED QUITE A BIT. SO
UNFORTUNATELY, I DON'T THINK THE LOW GAS FEE WILL ACTUALLY
DRIVE MORE ACTIVE USERS AT THIS STAGE. I THINK IT WILL STILL BE BROADER MARKET DRIVEN.”
ETHEREUM COFOUNDER VITALIK BUTERIN RECENTLY SAID THAT THE LONG AWAITED ETHEREUM
MERGE, WHICH WILL SEE THE BLOCKCHAIN MOVING TO A PROOF-OF-STAKE MODEL,
MIGHT HAPPEN IN AUGUST, BUT THERE COULD BE A DELAY - NOW, THERE’S BEEN A LOT OF DEBATE ABOUT
WHAT IMPACT THE MERGE WILL HAVE ON GAS FEES, IF ANY. WHAT ARE YOUR THOUGHTS ON WHETHER THE
CURRENT LOW FEES COULD DELAY THAT PLAN AND HOW MIGHT FEES ACTUALLY DIFFER ONCE IT DOES HAPPEN?
WELL, ALL OF US ARE NO STRANGERS TO DELAYS IN A LOT OF THESE TIMELINES, BUT I AM VERY HOPEFUL
THAT ETH 2.0, OR THE MERGE, WILL HAPPEN.
BUT BEARING IN MIND THAT'S JUST THE FIRST THAT'S THE INITIAL STAGE FOR ETHEREUM TO MOVE
FROM PROOF-OF-WORK TO PROOF-OF-STAKE. AND THE CHANGES ARE HAPPENING AT THE CONSENSUS LEVEL.
CHANGING THE CONSENSUS MECHANISM AND THE IMMEDIATE EFFECT ON GAS FEES, I WOULD SAY, IS NOT APPARENT
YET. IT'S NOT A GUARANTEE THEY WILL SIGNIFICANTLY LOWER THE GAS FEE ALREADY AS THE MERGE HAPPENS.
BUT THE ROAD OR THE VISION, THE ROADMAP THAT ETHEREUM HAS IS EVENTUALLY, AS WE
IMPLEMENT FURTHER CHANGES LIKE PROTO DANK SHARDING OR EVENTUALLY DANK SHARDING, THAT
IT WILL MAKE THE CHAIN A LOT MORE SCALABLE AND THEREFORE A LOT MORE AFFORDABLE TO USE FOR USERS.
THANKS ANNABELLE FOR EXPLAINING ALL THAT TO US TODAY.