The Ethereum network came under enormous pressure last week as the DeFi boom continued to reach new heights. Transaction fees reached a record $17.2 million as ETH price soared to $486, the highest level seen since mid-2018. Gas prices shot up to over 500 gwei, pushing the cost of a simple ETH transfer to over $4 and more complex operations into several hundred dollars.
The sudden price spike, though not unexpected, came with a steep price correction, and ETH broke through resistance at $460 and $440 before tumbling back down to a one week low of $309.44.
However, while the near-term price action looks unstable, the fundamentals point to long-term bullish sentiment. Ethereum miner revenue hit $800,000 an hour on Tuesday of last week, a record high that beat the previous record of $500,000 set the day before.
The high revenues were due to high fees, which can make the network less accessible for those with smaller budgets. However, fees have dropped alongside prices, and the fact that the network is teeming with activity is a net positive for the project.
While there are ongoing concerns about the level of congestion and high fees on the Ethereum network, co-founder Vitalik Buterin has pointed out that scaling solutions are already in place to reduce fees.
According to Buterin, solutions like zksync, loopring, and OMG are ready for use and simply need to see wider adoption among the Ethereum community to take full effect. Buterin did signal, however, that gas prices may not sink to historically low levels again now that the network is so widely used, saying:
“I do think that contract devs will have to change to adjust to the new reality; the things that you optimize for will be different than they were in the last few years.”
ETH 2’s Medalla Testnet Operating Smoothly
ETH 2 researcher Danny Ryan stated on an Ethereum Foundation call on September 3 that the Medalla testnet was coming along well, suggesting that the team would launch a temporary testnet in the last week of September.
Should the upcoming “dress-rehearsal” be a success, the chance of Phase 0 launching in 2020 becomes greater.
But as Bison Trails protocol specialist Viktor Bunin pointed out, the date for the dress-rehearsal is not be a hard deadline, and delays are, as always, a possibility.
DeFi Continues to Smash Milestones
The total value locked in DeFi has dipped below $8 billion after peaking at $9.51 billion last week before the price of ETH experienced its heavy correction.
The rapid growth in TVL came about after SushiSwap forked the decentralized exchange, Uniswap, and added a governance token, SUSHI. This saw the vast majority of Uniswap’s liquidity move to SushiSwap in an attempt to “farm yield” that – at times – was generating over 3,000% APYs.
The project collapsed after the lead developer of SushiSwap announced that they had sold their SUSHI tokens for ETH, sending the price of SUSHI tumbling. SushiSwap has since been handed over to the CEO of centralized exchange, FTX and its future is now uncertain.
Curve Finance, the DeFi exchange at the center of an ongoing centralization controversy, has inspired the creation of a new project that aimed to execute a “fair launch”. Following allegations that Curve founders launched a secret pre-mine in order to reap profits and maintain centralized control over the network, an anonymous party has announced the launch of Swerve.
Swerve aims to solve problems of fair distribution and transparency while maintaining most of the features of the original Curve protocol. The Swerve project launched last week amongst similar concerns over whether its launch was in fact fair.
Finally, a recent survey showed that the supply of Wrapped Bitcoin on the Ethereum network doubled in August. DeFi gained 26,000 WBTC, more or less in line with the supply of real BTC being created by miners.
The rise of tokenized Bitcoin supply raises questions about the long-term usefulness of the Bitcoin blockchain, with some analysts stating that the Ethereum network may be able to supply the market with Bitcoins instead.
CoinDesk is hosting a two-person presentation on “What to Expect When Phase 0 Launches” with discussion led by Coindesk Research Analyst Christine Kim and Senior Research Analyst Galen Moore.
DeFi Lab is hosting a Spanish-language event on September 10 called “Is decentralized finance an alternative for savers?”. The event will focus on the issue of the negative interest rates and zero interest rates seen in DeFi, with discussion focusing on whether there will be viable opportunities in DeFi for people looking to save funds and gather interest over time. There will be featured speakers from Bit2Me and The Defiant, as well as ex-Bloomberg journalist Camila Russo, and over 100 attendants are expected.
The r/ethstaking community on Reddit is hosting the sixth Ethereum Stakers Community Call on September 10. Discussion will focus on developing the Ethstaker community as a development resource during the lead-up to the Phase 0 launch and is open to all.