Ethereum Gas Fees Spike to Yearly High Amid a Renewed Meme Coin Frenzy
The recent surge in interest in meme coins like PEPE has sent the daily median Ethereum gas price, or transaction cost, above 12-month highs. The increased usage of the Ethereum network has also prompted a rise in the ETH burn rate. While the memecoin frenzy seems to return, what does it mean for Ethereum holders?
ETH Gas Fees Surge As Meme Coin Mania Kicks Off with Pepe
The recent launch of PEPE, a frog-themed meme coin that is an adaptation of the popular movie franchise “Pepe the Frog,” has sparked a renewed interest in meme coins. The token, which has seen massive success since its debut, is also primarily responsible for driving up the ETH gas fees.
According to data by CoinGecko, PEPE has gained a staggering 555% over the past two weeks alone. The token surpassed the $500 million mark in market capitalization within three weeks of its launch and entered the top 100 largest cryptocurrencies by market capitalization on May 1.
PEPE is the 57th largest cryptocurrency, with a market cap of over $823 million. In the last 24 hours, the trading volume for PEPE surpassed $143 million on Uniswap, higher than Wrapped Bitcoin (WBTC) and USDT stablecoin volumes.
The success of the PEPE coin has also renewed interest in other meme coins, including CHAD and 4TOKEN, which have rallied 450% and 250% in one week. Another cryptocurrency DINO has risen 500% in two weeks.
The new meme coin frenzy has sent ETH gas fees through the roof. As of May 9, the average cost of a single transaction on Ethereum stands at above $21. On May 5, the gas fee hit a multi-month high of above $27.
This is not the first time Ethereum’s mean transaction fees have reached such high levels. During the 2021 bull market, the gas fees hit as high as $70, though things have been quiet since the market crashed in May last year.
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ETH Burn Rate Increases Amid Rising Demand
The increase in network demand has also prompted a rise in the Ethereum burn rate. Data from Ultrasound Money, a website dedicated to Ethereum’s activities post-Merge, shows that 115,939 ETH (around $214 billion) has been burned over the past 30 days.
Zooming out, the data shows that 197,728 ETH has been burned since the Merge occurred 236 days ago. This suggests that around 58% of the total burned ETH since the Merge was burned in the last month, triggered by increased activity in the network.
Uniswap, the largest decentralized exchange, has accounted for most of the recent burns. Data by Ultrasound Money shows that approximately 36,000 ETH has been burned by transactions on the DEX in the last 30 days.
The burn rate sits at around 4 ETH per minute over the 30-day timeframe. Over one day, the burn rate is at 6.82 ETH per minute.
The burning is related to the Ethereum Improvement Proposal (EIP)-1559, implemented in August 2021. The EIP-1559 changed how Ethereum calculates and processes network transaction fees, adding a mechanism to burn a portion of fees paid by users.
The Merge upgrade made the burning mechanism even more effective, putting ether on the path to becoming a deflationary asset by replacing miners with validators as entities responsible for running the blockchain and causing a drastic reduction in the newly minted ETH.
At the time of writing, ETH is trading at $1,847, almost flat over the past day. The token is, however, still down by more than 62% compared to its all-time high.
Do you think the new meme coin frenzy will benefit the price of ETH by creating additional demand for the network? Let us know in the comments below.