Is Ethereum Gas Fee Really Expensive?

Text: Guo Xinchen

Produced by: Gyro Finance

Is Ethereum’s gas fee really expensive?

Why are so many people using it even though the gas fee is so high?

When will Ethereum gas fees return to “low prices”?

This article will answer these three questions from another perspective.

Is Ethereum’s gas fee really expensive?

First of all, what is expensive? It is unscientific to judge by price alone. When we evaluate Ethereum gas fees, the most important evaluation criterion should be the value of Ethereum itself, including the value of its ecosystem.

You must know that with the continuous development of its ecology, Ethereum is no longer a simple entity.

In 2017, Ethereum attracted a lot of traffic into the Ethereum ecosystem with its huge advantages of ICO. At that time, there were all kinds of weird projects on Ethereum. But today, when we look at the Ethereum ecosystem again, various innovative products such as MakerDAO, Compound, Aave, IDEX, Loopring and other projects are flourishing. Ethereum has grown from a small vendor to a super mall. It's just that we haven't realized or adapted to the growth of Ethereum.

(DAPP project funding ranking on Ethereum)

An interesting project here is WBTC. WBTC is a Bitcoin asset that is standardized into the ERC20 format and issued on Ethereum. In recent months, the total amount of WBTC has increased exponentially.

(The blue line indicates the total amount of WBTC)

We can clearly see that the rapid development of WBTC is mainly due to the fact that as Ethereum has more and more opportunities, most Bitcoin holders want to seize the opportunity of Ethereum while not missing out on Bitcoin, so mapping Bitcoin assets to Ethereum has become a must.

Why are so many people using it even though the gas fee is so high?

Price screens demand, and demand determines value. The price increase caused by congestion is an automatic adjustment mechanism for demand. By raising prices to screen out higher demand, congestion is reduced, and higher demand also increases the value of congested areas, thus achieving a balance between price and demand.

Ethereum Gas Fee made its own choice based on the principle of “user beware”.

The transaction gas fees of hundreds of RMB have deterred ordinary users and also caused various CX and junk projects to leave Ethereum. You know, it is much cheaper to cheat people on Tron than on Ethereum.

In fact, the gradually increasing gas fees are a kind of demand screening mechanism. Only high-value projects or projects that want to become high-value projects can survive on Ethereum with high gas fees. The former have the money to pay, and the latter are willing to pay.

When will Ethereum gas fees return to “low prices”?

Ethereum’s high gas fees will become the norm.

We can assume that if the gas fee of Ethereum is low, due to the high-quality ecological environment on Ethereum, it will inevitably attract a lot of CX and junk projects to be built on Ethereum. However, the resources of Ethereum are limited, or it is difficult for Ethereum's resources to meet the requirements of a large number of CX and junk projects.

If Ethereum forcibly maintains a low gas fee, the resources of high-quality projects will be plundered by junk projects, and the bad money will soon drive out the good money, causing high-quality projects to choose other public chains or build their own public chains in order to seek better resources. This is also the reason why it is difficult for high-quality projects to appear on Tron.

(Comparison of market capitalization of TRON and Ethereum)

The two projects have a market value difference of nearly 21 times. Once the high-quality projects on Tron develop, they will find that Tron is unable to meet their needs. At this time, in order to develop better, they need to go to a larger platform - Ethereum.

The one-click migration protocol for Ethereum projects established by Tron will eventually become a tool for high-quality Tron projects to move towards the Ethereum ecosystem.

Therefore, as Ethereum continues to develop, the value of its ecological projects continues to rise. High gas fees are the best screening tool for users and ecological projects. While screening projects, users are also screened. And screening makes Ethereum better.

Ethereum is gradually becoming a tall building.