Gas fees on the Ethereum network have soared to levels not seen since March 2023, driven by the growing interest in a new experimental token standard known as ERC-404.
Gas Fees Reach Peak Levels
On Feb. 9, Ethereum network gas fees spiked to an average peak of 70 gwei, equivalent to $60 for a standard transaction. Peak gas costs surged even higher, reaching 377 gwei, marking the highest levels since May 12, 2023.
ERC-404 Token Standard Gains Momentum
The surge in gas prices coincided with the rising popularity of the ERC-404 token standard, which gained momentum following the launch of the Pandora project on Feb. 5. Since its launch, Pandora has seen remarkable growth, with over 6,100% increase in value and a trading volume exceeding $474 million.
Fractionalized NFTs and Gas Optimization
ERC-404 aims to bind ERC-721 nonfungible tokens (NFTs) to ERC-20 tokens, enabling fractionalized ownership of NFTs. Despite being unofficial, the standard has garnered significant attention within the crypto community.
The developers behind Pandora are actively working on optimizing gas costs associated with ERC-404 transactions. They aim to reduce gas fees by up to 300% to 400%, emphasizing the importance of gas optimization for wider adoption.
Impact on Gas Consumption
According to gas-auditing firm Gaslite, ERC-404 tokens consume approximately three times the gas required for an average NFT transaction. The surge in gas consumption is primarily driven by trading volumes generated by projects like Pandora and DeFrogs, which collectively recorded over $600 million in trading volume over the past week.
The surge in Ethereum gas fees amid the ERC-404 craze underscores the growing demand for innovative token standards and the challenges associated with scalability and gas optimization on the Ethereum network. As developers continue to explore new solutions, optimizing gas costs will remain a key focus for enhancing user experience and driving wider adoption of decentralized applications (DApps) and blockchain-based assets.