Ethereum users are facing higher gas fees amid a meme coin frenzy that has seen investors move large amounts of funds into a frog-themed token called PepeCoin (PEPE). The daily median gas price, measured in gwei, hit a 12-month high of 87 gwei this week, a surge of over 50% since the token launch on April 18. CoinMetrics has attributed the rise in gas price to demand for Ethereum mainly from meme coin traders who have contributed more than 410,000 transactions on Uniswap. PEPE has already reached a $500m market capitalization within a three-week period, making it the most memeable token in existence. In addition to PepeCoin, other smaller coins like CHAD, 4TOKEN, and DINO have seen surges ranging from 250% to 500% in the last few weeks.
The PepeCoin frenzy has seen leading decentralized exchange Uniswap’s PepeCoin-wrapped Ether liquidity pools soar to become the most active liquidity pool on the platform, causing gas fees to rise. Investors have spent over $10m worth of gas burning for PepeCoin transactions on Uniswap’s platform. Although the rise in gas price shows a strong demand for Ethereum, it has made using the platform more expensive for all users.
CoinDesk, the leader in news and information on cryptocurrency, digital assets, and the future of money, reports that as meme coin mania takes hold, Ethereum costs are skyrocketing. The frenzy surrounding the frog-themed token PepeCoin has caused the daily median gas price to climb by over 50% since its April 18 launch. The soaring gas prices demonstrate increased demand for Ethereum from meme coin traders. The launch of PepeCoin has sent shockwaves through the market, with similar trends observed in smaller coins like CHAD, 4TOKEN, and DINO, whose values have surged from 250% to 500% in just a few weeks. Despite these surges, users must now pay more to execute smart contracts on Ethereum.
The rise in gas prices has hit a 12-month high of 87 gwei, according to Dune Analytics, adding that the Ethereum network is becoming expensive to use due to strong demand from meme-coin traders. The situation is so dire that leading Ethereum-based decentralized exchange Uniswap’s pepecoin-wrapped ether liquidity pools have become the most active liquidity pool by transaction count. Scimitar Capital’s Alex tweeted data showing that PepeCoin traders accounted for more than 410k transactions on Uniswap, burning about $10m worth of gas in the process. At this rate, it is possible that other smaller coins like CHAD, 4TOKEN, and DINO could see similar surges in value over the next few weeks.
Ethereum gas prices, or transaction costs, have surged by over 50% since the launch of PepeCoin, leading many to question whether meme coin mania is fueling an unsustainable market bubble. The soaring gas prices are due to strong demand for Ethereum, mainly from meme-coin traders looking to profit from its soaring value. According to analytics firm CoinMetrics, PepeCoin’s success has resulted in a fully-diluted valuation of nearly $600m. However, these increasing costs are pricing out many smaller investors from the market, making it harder to execute transactions on the Ethereum blockchain. For now, it remains to be seen whether this trend will continue or whether it represents a short-lived market frenzy.
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https://www.coindesk.com/markets/2023/05/05/ethereums-median-gas-price-surges-to-12-month-as-pepe-frenzy-grips-market/