Ethereum transaction fees have fallen more than 85% in the last three weeks, partly due to the increased usage of centralized exchanges for DeFi access.
After hitting an all-time high of almost $12 in September, the average fee for Ethereum transactions has fallen steadily over the last three weeks.
According to data compiled by analytics firm Glassnode, ether gas fees have fallen 86.2% after reaching a peak of 42,763 ETH on September 17. Gas fees on October 4 totaled just 5,898 ETH, marking a substantial decline and giving clients a reason to hope network congestion has subsided for the second-largest crypto-asset by market capitalization.
In addition to fees, the total number of transactions on ETH’s network has undergone a contraction. Since reaching a 2020-high of 1.32 million ETH transactions on September 17, network activity has fallen 29.2% to 935,000 on October 4. The total value of ether being sent has also declined, dropping from 6.5 million ETH to 1.7 million over the same time span, representing a decrease of 74%.
The surge in ether fees between June in September was largely attributed to the rise in popularity for decentralized finance (DeFi) products, including yield-farming protocols. Uniswap, Curve, Aave and other DeFi platforms experienced a surge in adoption and user demand, leading to a sudden uptick in Ethereum network usage.
However, the decline in transaction fees and ETH sends over the last month also points to users moving away from strictly DeFi platforms. Leading cryptocurrency exchanges like OKEx and others have been active in promoting DeFi adoption.
OKEx for example announced the integration of Uniswap and Compound as part of the platform’s Earn program. In a press release published last month, OKEx announced Uniswap integration for its Earn program, allowing users to mine and send Uniswap contracts.
By letting users earn interest on DeFi protocols via a centralized platform, the number of transactions and interactions with smart contracts on Ethereum drops, reducing network congestion.
OKEx also updated its platform to interface with DeFi giant Compound, providing clients the ability to subscribe to BAT, DAI, ETH, USDC, USDT, and ZRX through the platform’s on-chain protocol. With the integration of Compound, OKEx users have the ability to earn interest on DeFi protocols, receive bonuses, and generate yields from staked assets.
While ETH has witnessed a decline in transaction volume over the last month, the rise of centralized exchange adoption for DeFi protocols has also likely played a role in the falling transaction fees.
Users are now able to leverage centralized exchanges such as OKEx to access the Uniswap and Compound protocol, all the while participating in the added benefits fo the Earn program.
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