Ethereum is too congested to bear? Miners manually increase the gas limit

As Decrypt reported yesterday, the mining community has increased Ethereum’s network capacity, allowing more transactions to be processed on the network. This is due to a surge in network traffic, with stablecoin Tether and gambling game Fair Win taking up a lot of space on the Ethereum network.

Ethereum co-founder Vitalik Buterin said last week that block producers have begun to increase gas limits due to network congestion. In the Ethereum network, gas is an independent cryptocurrency used to pay for transactions, and the gas limit actually controls how many transactions can be included in a block. This is similar to Bitcoin's blockchain capacity cap.

But in Ethereum, gas limits change gradually. As the network gradually adapts to the current environment, each miner can increase the gas limit by 1/1024 according to current standards, thereby slowing down the rate at which the gas limit increases and decreases.

Today, miners continued to increase the gas limit, causing the gas value per block to exceed 10 million, an increase of 25% from last week. This means that each Ethereum block can now contain about 25% more transactions than the week before.

This allows the Ethereum network to process more transactions per second, helping to keep fees down. However, it does mean that the blockchain capacity grows faster, making it more expensive to run nodes and difficult to continue running the network.

What caused Ethereum to get stuck?

Tether appears to be the main reason for the growing number of Ethereum transactions. Over the past few months, the stablecoin has begun to move from the Bitcoin network to Ethereum. This has put a huge burden on the Ethereum network due to the large number of transactions it processes every day.

In an interview with Canadian media outlet the Star, Buterin noted that scalability is a significant bottleneck because the Ethereum blockchain is almost full.

Earlier this month, news broke that 25% of all transactions on the Ethereum network were made by Tether.

But Tether isn’t the only coin taking up space on Ethereum. The blockchain gambling game Fair Win has racked up $1.17 million in transaction fees over the past 30 days, suggesting the company is also generating a lot of transactions.

(Ethereum transactions have gradually filled up blocks, image source: Coin Metrics)

According to intelligence provider Glassnode, the growing popularity of decentralized finance (DeFi) applications is also putting pressure on the network. The report states that about 45% of transactions are completed through smart contracts - mainly from DeFi applications.

The problem worsened on September 20, when Ethereum’s daily transaction fees surpassed Bitcoin’s for the first time since March 2019. On that day, Ethereum transaction fees were $207,000, while Bitcoin’s were just $180,000. But Ethereum’s die-hard fans saw this as a good thing, as it showed that the network was in high demand.

A controversial choice?

Ethereum’s gas limit increase was considered a controversial move.

A Bitcoiner at Stanford Law School believes that raising the gas limit shows that the network is centralized, saying that this shows the high level of control that Ethereum miners have over the network.

In response, John Adler, a scalability researcher at ConsenSys, said:

“Are you not aware that the community has been discussing for weeks that miners should raise the gas limit?”

Another problem caused by increasing the gas limit is that it will cause Ethereum to include more transactions per block. This means that the capacity of the blockchain will grow at a faster rate, and Ethereum nodes will be under greater pressure. Miners will have to spend more money to buy equipment with more storage space. If the number of miners decreases, this may lead to the network becoming more centralized.

However, even though the network’s capacity is slowly growing, new ethereum blocks have begun hitting the new cap, suggesting the gas limit will need to increase again soon.