As per the data report published by Nansen, Ethereum’s gas prices experienced a massive upward surge, reaching as high as 1062 Gwei, following the sudden 300% spike in consumption for lending and borrowing services as traders began exchanging their assets to fiat amid this year’s ongoing crypto market crash.
Gas, which is measured in “Gwei,” quantifies the computational prowess needed to facilitate an individual transaction within the Ethereum network. At its very core, the higher the gas, the more the particular transaction cost. Naturally, as the network gets more and more congested, so too is the spike in gas fees.
While the apparent decline in the market price value of ETH, the network’s native token, typically translates to transaction fees going down as well, the sheer amount of activity within the network driven by the aforementioned significant trader exits caused a sudden spike in the price of gas in USD. At one point this Thursday, the approximated cost for an individual Tether (USDT) transfer went as high as over $20.
The crypto market saw an overwhelming amount of cash withdrawals from the entire Decentralized Finance (DeFi) sector recently following the collapse of the UST. Experts believe that investors are now losing faith in any of the top DeFi solutions and stablecoins. They are now actively shifting their money away from various liquidity contracts, leading to the massive pressure experienced by lending and borrowing platforms.