An investor spent a substantial 76% of their total transaction value on gas fees to acquire a single memecoin.
A recent transaction observed one trader paying an astounding 64 Ether, or roughly $118,000, in gas fees to acquire $155,000 of a memecoin known as Four (FOUR).
Per information from the widely recognized blockchain monitoring service, Whale Alert, the investor parted with an eye-popping $119,157 in Ether ETH $1,875 to finalize a Uniswap exchange that converted 84 Wrapped Ether (WETH) into 13.8 billion FOUR tokens.
The trader seemingly decided to raise their gas fee willingly to hasten the transaction time for the memecoin purchase. According to the pseudonymous Twitter user, FlurETH, the trader involved has an unrealized profit of 133 ETH ($245,667) on their memecoin investment.
Gas fees on the Ethereum network have sparked discussions among crypto enthusiasts. While some Ethereum advocates applaud the increased activity for its potential to generate revenue and exert long-term deflationary pressure on Ether’s supply, others criticize the high fees, arguing they pose a barrier to mass adoption.
Cointelegraph has reported that the recent surge in Ethereum gas fees can be attributed mainly to the memecoin frenzy, largely fueled by the rampant acquisition of a new memecoin named Pepe (PEPE). At the time of reporting, the average Ethereum transaction fee was $22.98, the highest since May 12, 2022, when it peaked at $31.11.
Another significant factor behind the skyrocketing gas fees is the maximal extractable value trading bot that’s preempting memecoin trades on a large scale. The infamous MEV bot and “sandwich” attacker, known only as jaredfromsubway.eth, has been reaping substantial benefits from the increased network usage.
In a sandwich attack, an attacker places the victim’s transaction between their own two transactions to manipulate the price and profit from the victim. On April 18, Jared made an impressive $950,000 in profits from sandwich attacks. Jared has also been among the biggest gas consumers on the Ethereum network. On April 20, Jared utilized 7% of the total network gas and spent 455 ETH on transaction fees.
Gas fees are a critical component of the Ethereum network, acting as the transaction cost necessary for miners to validate and add transactions to the blockchain. The fluctuation in gas fees is directly tied to the demand for block space on the Ethereum network. When the network is busy, the demand for block space increases, which subsequently raises the gas price.
Given the complexities and nuances of Ethereum gas fees, users should be mindful of the potential implications of high fees on their transactions. High gas fees can significantly impact the profitability of transactions, particularly for smaller investors or those participating in high-frequency trading.
The aforementioned situation underlines the necessity for scalability solutions and efficiency improvements on the Ethereum network, a problem Ethereum 2.0 seeks to solve. This upgrade aims to improve the network’s scalability, security, and sustainability, potentially leading to lower gas fees and a more efficient user experience.