Ethereum, the second largest cryptocurrency by market capitalization, has seen one of its biggest boom periods in recent weeks, driven by the rise of decentralized finance. However, the increase in transactions on the Ethereum chain has led to an increase in its commissions. Reason why Changpeng Zhao has commented on the Tweet of the day, that exchanges will have to adjust commissions for Ethereum sooner or later.
Commissions in Ethereum
The great news of the crypto world during this year 2020 has been, without a doubt, the rise of decentralized finance. And it is that, after being only a promise for several years, finally the DeFi sector has increased its value exponentially in the last three months. A fact that has driven other cryptocurrencies such as Ethereum.
And it is that, although Ethereum is not by itself a project dedicated to DeFi. The architecture of its Blockchain is designed for the creation of smart contracts. Thanks to which, the ETH chain is one of the most popular for the development of different decentralized finance projects. Which increases the demand for Ethereum and therefore its price.
Although this might seem positive at first, as it would mean greater adoption of the cryptocurrency. The truth is that, by radically increasing the number of transactions on its Blockchain. The fees (gas) charged for each transaction on Ethereum have also skyrocketed. Which has not only affected users, but also exchanges as Changpeng Zhao commented:
«The high gas commissions of the ETH network are causing problems in most exchanges, with losses of between $ 10 and $ 20 for each withdrawal. We will have to adjust our withdrawal fees sooner or later«.
With this message, Changpeng Zhao would be making visible a problem that is already affecting crypto-asset exchanges. Well, by covering transaction fees for customer withdrawals, platforms are losing money. Facing the difficult situation of having to increase their commissions to avoid incurring costs due to the situation of Ethereum.