Ethereum transaction fees fall as DeFi market cools

In the last few months of 2020, the DeFi bubble seemed to be shrinking, with fees and confirmation times falling back to less high levels.

“ETH fees are falling, which suggests that the DeFi craze has waned for now,” Josh Olszewicz told Cointelegraph.

He also said: “BTC mining difficulty dropped by 16% as the DeFi craze died down.” According to Olszewicz, Bitcoin’s network behavior has nothing to do with the drop in Ethereum transaction fees. “It just happens to be correlated,” he explained.

Bitcoin hashrate has recently declined, indicating that the network has less incentive to mine. Over the past few days, the Bitcoin blockchain has seen high levels of congestion, resulting in longer confirmation times and many transactions remaining unconfirmed. The network completed a huge difficulty adjustment on November 3, and Olszewicz believes that the decline in hashrate is more likely to be a catalyst for high fees and network congestion than the difficulty adjustment.

“Not sure why Bitcoin transaction fees are so high,” Olszewicz said. “Fees should have ‘burned away’ from the high congestion by now, so not entirely sure why, but total daily fees are increasing,” he explained. “There may be a lag effect in the network.”

Bitcoin continues to capture investor attention as it challenges 2019 highs and threatens to break out, while discussions about BTC adoption among mainstream companies continue.