The current crypto selloff, paraphrasing famous Leo Tolstoy’s citation of all unhappy families being unhappy for different reasons, unlike all happy families whose happiness is more uniform, is more selective to individual stories in the coins, that one can readily admit. For instance, Bitcoin (BTCUSD) has been showing signs of tiredness of its rally for a couple of months before its price decline intensified. Doge (DOGEUSD), in its turn, at some point involuntarily gave up its momentum to other “Shiba dog family” coins, etc. But what exactly was wrong with Ether (ETHUSD) which seemingly ran full speed before it painfully stumbled?

We do need more quality DeFis for the very simple reason of the insatiable ubiquitous need of a universal tool helping various decentralized worldwide projects, including the very important in the era of pandemics humanitarian ones, to attract funding. There is simply no alternative at the moment. So, yes, if we speak about the future of decentralized finance and its tools – there is little doubt it will be absolutely bright. But when we unambiguously link to this story Ethereum saying this it is the only sourcing medium for a variety of such altcoins, then it may be the right time to revise such beliefs.

The main Ethereum’s concern has been its rising gas fees. As we know, gas fees are measured in gwei, which denotes a “giga-wei.” One gwei is 0.000000001 ETH. When submitting an order, users must indicate a “gas limit,” which is the maximum amount they’re willing to pay to have their transaction added to the blockchain. When the number of users conducting transactions on the network goes up, the price of gas rises too. Unprocessed orders for Ethereum sit in a “mempool” (memory + pool) where miners can see how much additional “gas” an individual is willing to pay to have their order prioritized, on top of a base fee automatically generated by the network subject to current demand. For some people participating in various crypto contribution campaigns, the gas fees lately may have exceeded such contributions, which meant they had to walk away without either entering their projects or getting back their invested money if they changed their mind and wanted a refund. That became a moment of truth for Ethereum.

Graph 1. Ethereum Price vs. Ethereum Transaction Fees: More Room For Further Moderation

Source: Messari.io

The issue of high gas fees became news to normies after a group of over 17,000 people called ConstitutionDAO (DAO – short for decentralized autonomous organization) decided to crowdfund an effort to buy a copy of the U.S. Constitution. It was exactly due to raising like a yeast transaction fees, the founder of Ethereum, Vitalik Buterin, explained back in the summer about soundness of moving Ethereum to a proof-of-stake system in 2022, which Ethereum developers would incur a less cost, while making the whole process more energy efficient. So for some time the proof-of-stake system became truly iconic. However, the past late summer it disappointed many Ethereum followers basically showing its limited capacity to address the problem. Though the DAO raised over $40 million, their bid failed. The founders had little choice but to refund contributions their already spent gas fees. Members spent more than an estimated $1 million on gas fees to retrieve their donations…

Though some ConstitutionDAO members might have been surprised by the high cost of gas fees, they are an increasingly standard feature in the Ethereum network. It currently uses a proof-of-work consensus protocol, in which computers on the network attempt to solve complex math problems in order for a reward of Ethereum.

There are two main incentives for miners on the Ethereum network: one is to mine Ethereum to get paid in newly minted ETH; the other is to extract fees (paid in ETH) from users on the network by processing their transactions. But slowly the same advantages are offered by Ethereum competitors such as Solana (visit our previous article on Solana: https://docs.google.com/document/d/18YWfqWp41BznlOjUTzREMYsGQiQphFcJdd_5kSY0Qlc/edit ).

This was the beginning of Ether facing competition from alternative DeFi sourcing options, and this may have created the premises of Ether price becoming less stable than before. However, change is not easy in the blockchain space. Its crucial to choose the right platform at first and once decided, we need to stick to the platform of choice because our data is synced with thousands of nodes.

New projects are certainly moving to cheaper alternatives and developers exploring options like Polkadot (DOT) and Solana (SOL).

Graph 2. Polkadot Transaction Fees: Tangible Advantage over Ethereum

Source: Messari.io

Let’s review the main sourcing cryptocurrencies and their transactional parameters:

Name of coinTickerCurrent Marketcap, USDMVolume last 24Hr, USDPercentage Change 30 days, over ETHPercentage Change Ytd USDVolatility 1YrSectorToken UsageTotal Fees 24hr USDMedian Fee 24hr USD
EthereumETH28981550680030690.00-35.431.02Smart Contract PlatformsPayments, Work39119058.3816.1591
CardanoADA36497103515105230.63-20.751.26Smart Contract PlatformsPayments, Vote52682.360.1929
SolanaSOL307541335365516-14.27-45.231.53Smart Contract PlatformsPayments48782.010.0003
PolkadotDOT177925870819937.05-36.691.36Smart Contract PlatformsPayments, Vote28675.7218.0500
AvalancheAVAX15331523586599.9-8.75-44.801.78Smart Contract PlatformsVote, Payments, Work213.48N/A
Ethereum ClassicETC31987102864902.77.39-30.771.59Smart Contract PlatformsPayments127.530.0005