The 5.19 plunge caused the average gas price to soar by 210%.How does the gas price affect the Ethereum ecology?

On the evening of May 19th, CoinMarketCap data showed that ETH fell sharply in a short period of time, with the lowest quotation of $2,014.72, a 70.64% dive from the intraday high of $3,437.94. Affected by this, the average price of Ethereum Gas Price reached 236 Gwei, a sharp increase of 210% from the previous day, and the intraday average price amplitude was as high as 2935%. Gas price has become a topic that cannot be avoided in the development of Ethereum, and this has become more prominent after the outbreak of DeFi. Benefiting from the prosperity of DeFi, ETH has been in a strong upward trend in recent years. According to the currency price data corrected by CoinMetrics, the average monthly increase of ETH this year is about 33.66%, and the highest monthly average increase has reached 47.53%. Especially in the near future, ETH has stood above the $4,000 mark many times and kept setting new historical highs, showing an eye-catching performance. However, the development of everything has two sides, and DeFi has also brought some problems to Ethereum. The first is the surge in demand for transactions on the user chain, resulting in high gas fees. After in-depth analysis of Ethereum Gas data in recent years, PAData found that, 1) Since the second half of last year, the average monthly Gas price has increased significantly, and has risen by about 114.56% so far. This year, the monthly average Gas price has always been higher than 110 Gwei; 2) Gas fees Daytime fluctuations are gradually increasing, which increases the difficulty for users to bid, or boosts the growth of Gas. There are 65,519 unconfirmed transactions on the entire Bitcoin network: Jinse Finance reported that according to data from BTC.com, the current number of unconfirmed transactions on the entire Bitcoin network is 65,519, and the 24-hour transaction rate is 3.99txs/s. At present, the difficulty of the entire network is 15.14T. It is predicted that the difficulty will be lowered by 6.3% to 14.18T next time, and the adjustment is still 14 days and 7 hours away. [2020/5/22] Secondly, there is a redistribution gap in the wealth effect brought by DeFi. PAData analyzed the Ethereum mining data and MEV data and found that miners and arbitrage traders have obtained most of the benefits: 1) Gas fees have become an important source of Ethereum miners' income, and are the main driving force for miners' income. The average proportion of gas fees reached 44.40%, and the monthly increase of gas fees was basically higher than the increase of mining income in the same period; 2) Under the arbitrage opportunity, the optimal gas fee auction mechanism (Priority Gas Auction, PGA) has formed the maximum extractable value with great potential The (Maximum Extractable Value, MEV) market has reached 615,100 ETH, and the total daily MEV accounts for about 5.80% of the total mining revenue on average. DeFi arbitrage traders are the main capturers of MEV, capturing about 88% of it share. In the past, the main method to improve the gas fee problem was that the mining pool agreed to increase the gas limit of the block (Gas limited) to achieve a small short-term expansion, but the effectiveness of this method is getting lower and lower. PAData has counted the increase of the previous gas limit and the increase of the number of transactions on the chain during the same period, and found that the increase of the gas limit is mostly lower than the increase of the number of transactions. This can only temporarily relieve the upward pressure on the gas price. In the end, the gas fee is driven by the rapid growth of the transaction demand on the chain. will still rise. On the fourth day of Huobi’s “Production Reduction Prophet” reached 41,137 people, and the prize pool has reached 51,928 USDT: On April 17, Huobi Global’s “Production Reduction Prophet” activity ended the fourth day’s forecast, and the total number of participants on that day reached 41,137, and the basis of the day The prize pool has reached 5291.77USDT, the seven-day prize pool has accumulated 33856.5USDT, and the koi prize pool has accumulated 51928.25USDT. For details, click the original link. [2020/4/17] The Ethereum fee has accounted for an average of 44% of the mining revenue. The increase in the daily fluctuation of Gas price is affected by the prosperity and development of DeFi. Since the second half of 2020, the Ethereum Gas price has increased significantly. The price rose from 57.3 Gwei to 122.9 Gwei this month, an increase of 114.56%. It is worth noting that since the beginning of this year, the monthly average price of Gas has always been higher than 110 Gwei. Among them, the monthly average price in January was the lowest, reaching 112.1 Gwei, which was comparable to the level of the DeFi rising period in August last year. The monthly average price in February was the highest, reaching 190.6 Gwei, which was comparable to the level of the DeFi peak period in September last year. Judging from the monthly increase, the price of Ethereum Gas has continued to grow at a high speed. Since the second half of last year, the average monthly increase of Gas prices has been more than 42%, and the highest average monthly increase has been more than 160%. However, it is worth noting that since the beginning of this year, the average monthly increase in Gas prices has slowed down. In the second half of last year, the overall average monthly increase in Gas prices was about 58.42%, but since this year, this rate has dropped to 22.60%. Quotes | The 24-hour trading volume of the cryptocurrency market is about 51.922 billion US dollars: According to CoinMarketCap data, the 24-hour trading volume of the cryptocurrency market is about 51.922 billion US dollars. The top five turnover rankings are as follows: the first is USDT, whose 24-hour turnover is US$16.770 billion, accounting for 32.30%; the second is BTC, whose 24-hour turnover is US$15.895 billion, accounting for 30.61%; The third is ETH, whose 24-hour turnover is $5.947 billion, accounting for 11.45%; the fourth is LTC, whose 24-hour turnover is $2.417 billion, accounting for 4.655%; the fifth is XRP, whose 24-hour turnover The amount was 1.097 billion US dollars, accounting for 2.11%. [2019/12/8] On the other hand, the daily volatility of the Ethereum Gas price showed a slight increase, that is, the daily average Gas price has a greater change and less stability. Last year, the average daily intraday volatility of Gas prices was about 3.22%, and so far this year, the average daily intraday volatility has risen slightly to 3.58%. In fact, the price of Gas is not only volatile during the day, but also volatile within the day. For example, according to the monitoring of Etherscan, the average intraday volatility of the average Gas price in the last week was as high as 373.31%. According to the current usage rules of the Ethereum block space, that is, under the optimal Gas auction mechanism (Priority Gas Auction, PGA), the increase in the volatility of Gas prices will increase the difficulty of user valuation, and users will lose their bargaining power and can only trade according to their own Timeliness requirements and ability to pay transaction costs to bid. This may boost the price of Gas, and also provide space for the maximum extractable value (MEV). News | 51.9 million USDT has been transferred from Tether Treasury address in the past 24 hours: According to Tokenview data, as of 18:00 Beijing time, the total amount of USDT transferred from Tether Treasury address on Omni and Ethereum in the past 24 hours is 51.9 million, Compared with yesterday, it has decreased by 26.86%. A total of 98.2 million USDT flowed into the exchanges, and were transferred to 5 exchanges. [2019/6/12] There is a gap in the redistribution of wealth in DeFi, with the proportion of handling fees reaching 44%, and MEV accumulating 615,100 ETH. In the past year or so, DeFi has demonstrated its potential in coordinating and distributing global capital However, the huge value brought by DeFi has not been captured by most ordinary users. Miners and arbitrage traders have become the main beneficiaries, and there is a gap in redistribution. According to statistics, since the beginning of this year, the average daily transaction fee of Ethereum has reached about 11,500 ETH, an increase of 176.39% compared with the daily average of 4164 ETH last year. This year, the highest single-day transaction fee is about 31,700 ETH, and there are another 5 days where the single-day transaction fee income exceeds 20,000 ETH. From the perspective of the proportion of handling fees, the average proportion of handling fees in total mining revenue this year is about 44.40%, which is about 25 percentage points higher than last year's average of 19%. Dynamic | 1519 unconfirmed transactions on the entire Bitcoin network: According to data from btc.com, the number of unconfirmed transactions on the entire Bitcoin network is currently 1519, the computing power of the entire Bitcoin network is 42.43EH/s, and the 24-hour transaction rate is 3.96 Second. As of now, the global average price of Bitcoin is $3472.51, with an increase of 0.5% in the last 24 hours. [2019/2/6] Service fees have become an important part of miners' income, and service fee income is still the main source of motivation for miners' income. According to the relative changes in the monthly increase in handling fees and the monthly increase in total mining income, since last year, in most months, the monthly increase in handling fees has been higher than the monthly increase in total mining income. The continuous rise in handling fees may also affect miners' mining strategies, affecting the rate of empty blocks and uncle blocks. According to Etherscan's statistics, since last year, the output of Ethereum's uncle blocks has continued to decrease. In addition to mining, there are also a large number of arbitrage opportunities in the DeFi world. Based on the current optimal Gas fee auction mechanism (Priority Gas Auction, PGA), this creates a maximum extractable value (Maximum Extractable Value, MEV) with great potential market. MEV refers to the profits earned by miners, validators, sequencers, and other privileged protocol participants) through their ability to arbitrarily include, exclude, or reorder transactions in blocks. According to the causes, MEV can be divided into various types, but currently 97% of MEV comes from arbitrage transactions, which will in turn push up the price of Gas in reverse. According to the data of MEV-Explore, since last year, MEV has shown an exponential growth trend. Since the second half of last year, MEV has increased by 1113.21%, and this year has increased by 45.41%. As of May 16, Ethereum MEV has accumulated to 615,100 ETH, equivalent to 554 million US dollars. Among them, only 12% are obtained by miners, and the remaining 88% are obtained by traders. The traders here mainly refer to arbitrage robots. Although MEV has grown rapidly, it is still very small compared to the output scale of the mining industry. According to statistics, last year, the daily MEV scale was only equivalent to an average of 5.62% of the daily mining revenue, and this year it slightly increased to 5.80%, basically remaining stable. It is precisely because the relative scale of MEV is still far smaller than the mining revenue, so most miners have not tried to capture MEV by themselves. However, with the rediscovery of the value of MEV and the further application of capture tools such as MEV-Geth, more and more computing power will join the battle for MEV in the future. The increase in the number of transactions is higher than the increase in the upper limit of Gas in the same period. Raising the upper limit is not ideal for alleviating the rise in Gas prices. The related problems of the increase in Gas fees in Ethereum have become the main crux of the development of the bottom network and the upper ecology. In the long run, The 2.0 upgrade is imperative. In the short term, in the past, it was mainly improved by increasing the upper limit of block Gas to achieve a small short-term expansion. Since 2017, the gas limit of the Ethereum block has been raised 6 times, including 2 times in 2017, 1 time in 2019, 2 times in 2020, and 1 time in 2021. Since 2020, it has been raised three times in less than a year and a half, which is the same as the total number of increases in the three years from 2017 to 2019. It is obvious that the frequency of gas limit adjustments in each block has increased recently. In fact, since May 2020, the Ethereum network has maintained high-load operation for a long time. The Gas usage rate of each blockchain has always been above 90%, and it has remained above 95% since June. The long-term high gas usage rate is also one of the main reasons for increasing the frequency of gas upper limit adjustments. However, trying to stabilize the gas price by increasing the block capacity is like drinking poison to quench thirst, which cannot fundamentally solve the problem, and its effectiveness is getting lower and lower. Judging from the relative changes in the previous Gas upper limit increase and the increase in the number of transactions on the chain during the same period, that is, the relative change between the supply increment and the demand increment, except for the increase during the bear market period from 2018 to 2019, the other previous gas During the adjustment period, the increase of Gas upper limit was far lower than the increase of on-chain transactions during the same period. This means that the increase in the upper limit of Gas can only temporarily relieve the upward pressure on Gas prices, and eventually Gas prices will continue to rise driven by the rapid growth in demand for on-chain transactions. In addition, there is still no more data to confirm that the application of MEV-Geth can make transaction packaging more transparent, thereby reducing Gas prices. Although at the end of April, when MEV-Geth was adopted by 58.8% of the computing power, the Gas price fell to a minimum of 45 Gwei, but since then, affected by the surge in transactions of dog Meme Coin such as SHIB, AKITA, ELON, the Gas price has rebounded to a maximum of 290 Gwei Gwei above. The EIP1559 proposal, which is about to be implemented in the London upgrade, is considered to help alleviate the problems related to the increase in Gas prices. This proposal will implement an elastic Gas upper limit mechanism and a transaction fee mechanism in which the base fee and tip coexist. The latter also brings deflation expectations . Although the specific impact of this proposal on Gas prices cannot be measured at present, if this reduces the income of miners, it may promote the development of markets outside the agreement, such as MEV, which may have a more far-reaching impact

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