Crypto News Ethereum

Ethereum Fees Touch Monthly Lows As Transaction Volumes Plummet

Ethereum fees had touched new highs thanks to the popularity of the decentralized finance (DeFi) space. As network activity had grown, so had the transaction volumes. The effects continue to linger even into the bear market, although fluctuations between low and high are now more common in the space. Presently, transaction volumes have fallen sharply and ETH fees have now plummeted to monthly lows. Ethereum Transactions At $0.5 Ethereum transaction fees have declined to one of their lowest points this year. Gas costs which have been fluctuating between high and low seem to have found their resting place at lower prices. In the early hours of Monday, the gas costs for the Ethereum network had declined to their lowest point for June. It sat at only 19.8 Gwei per transaction at the time of this writing, which converted to about $0.5 per transaction on the network.  Related Reading | Bitcoin May Not Reclaim All-Time High For Another Two Years, Binance CEO This translates to a more than 80% drawdown from the peak of the gas costs last week at 151.3 Gwei per transaction. This coincides with a decline in transaction volume on the network, as shown on Messari. The data aggregation website shows that Ethereum’s transaction volume is down more than 80% from its monthly high. On the 13 of June, transaction volumes on the network had sat at more than $10 billion in real volume. Today, the real volume was sitting at $570 million, the lowest it has been for the month. ETH price declines to $1,179 | Source: ETHUSD on TradingView.com Supply has also taken a hit in the month of June. By the end of last month, there was more than 8.6% of all total ETH supply in DeFi. However, as of the time of this writing, there is less than 8.3% of the circulating supply in DeFi. This also translates to a dollar value of under $10 billion when three weeks ago, the value was at $30 billion. ETH Profitability Tanks With the recovery in the price of Ethereum has come some good tidings for investors. But, there is still a gap in the profitability levels from last year compared to this year. Going into the last month of the year in 2021, more than 80% of ETH investors had been swimming in profit. Given that the digital asset had hit a new all-time high in November, this was expected. However, there is a significant drawdown from this point. Data from IntoTheBlock shows that while the majority of ETH investors remain in profit, it is only by a small margin. 52% of wallets are currently in the green while 47% are in loss. This puts only 2% of all investors in the neutral territory, which remains shaky. Related Reading | Bitcoin Perpetual Open Interest Suggests Short Squeeze Led To Crash When it comes to the growth of the network, there is more negative sentiment among investors. The major reason for this is all of the competitors that are moving into the DeFi and NFT space. Solana especially has been giving Ethereum a run for its money in the NFT game, triggering an exodus towards the network which offers faster transactions and lower fees. Nevertheless, Ethereum remains the second-largest cryptocurrency by market cap. Currently trading at $1,200 at the time of this writing, the cryptocurrency boasts a market cap of $149 billion. Featured image from CryptoSlate, chart from TradingView.com Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

Bitcoin Crypto News

Bitcoin Monthly Tags Lower Bollinger Band, Tool’s Creator Hints At Bottom

Bitcoin price action on monthly timeframes has made a historic move to the touch the lower Bollinger Band – a popular technical indicator and volatility measuring tool. Although he warns there isn’t yet a sign that a bottom is in, the tool’s creator says where price action tapped is a “logical” level for such a bottom to occur. Unprecedented Bitcoin Price Action Taps Monthly Bollinger Band For First Time In History Expectations for Bitcoin price in 2022 were closer to $100,000 per coin and above. Yet the top cryptocurrency today is trading close to its former 2017 all-time high at $20,000. But unprecedented macro conditions has caused unprecedented price action in Bitcoin and other cryptocurrencies. Never in the past has the top cryptocurrency by market cap retested its former all-time high this way. Related Reading | Bitcoin Weekly RSI Sets Record For Most Oversold In History, What Comes Next? And never did Bitcoin price on monthly timeframes ever reach the lower Bollinger Band. But that’s exactly what happened this past month when crypto market contagion spread and brought asset prices down considerably. BTCUSD monthly touches down on the lower Bollinger Band | Source: BTCUSD on TradingView.com Touching the lower Bollinger Band, however, could be a logical place for a bottom according to the tool’s creator. Time To Pay Attention: John Bollinger Points Out Logical Level For Potential Bottom The Bollinger Bands are a technical analysis tool that can help to measure and predict volatility, or find areas of potential resistance and support. It was created in the 1980s by John Bollinger, who today is a frequent Bitcoin speculator. It relies on a 20-period simple moving average and a dynamic upper and lower band set each at two standard deviations. Mr. Bollinger pointed out the touch of the lower Bollinger Band in a new tweet, where he suggests the area would be a “logical” level to bottom. Bollinger did warn, however, that there still aren’t signs of such bottoming yet. In the past, Bollinger was able to call out the April 2021 peak by spotting a “three pushes to a high” bearish reversal pattern with striking accuracy. The analyst says his tools later confirmed what he says was an “M-type” double top. Picture perfect double (M-type) top in BTCUSD on the monthly chart complete with confirmation by BandWidth and %b leads to a tag of the lower Bollinger Band. No sign of one yet, but this would be a logical place to put in a bottom.https://t.co/KsDyQsCO1F — John Bollinger (@bbands) June 27, 2022 Bollinger also shared in his chart a look at ancillary indicator, B%, which also has set historical lows. Monthly Bollinger Band Width can be used to measure volatility, and still has room to fall compared to past cycles. Related Reading | Is Bitcoin Like Buying Google Early? Check Out The Shocking Comparison Does Bitcoin price have more room to fall also? Or will a bottom form in this “logical” zone as the tool’s creator calls attention to? Either way, it seems to be “time to pay attention.” Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice. Featured image from iStockPhoto, Charts from TradingView.com

Crypto News

ViaBTC Capital | Reasons Behind Solana’s Frequent Downtime: Design Flaws in the Gas Economy

What is the gas fee? In the blockchain world, the gas fee is a fee that users have to pay to the blockchain network for each transaction. For example, when a user makes a transfer on Ethereum, miners must package his transaction and put it on the blockchain to complete the transaction. This process consumes the computing resources of the blockchain, and the fee paid to miners is called the gas fee. Gas economy Imagine that each public chain is a society or a city, and gas would be the currency that users need for various activities in the city, and the economic designs of gas have far-reaching impacts on the public chain’s future development. Today, we will illustrate the significance of the gas economy from the perspectives of performance and value capture. Performance – The frequent network congestion of Solana In early May, Solana’s mainnet lost consensus, and block generation was suspended for 7 hours. The mainnet was down due to the NFT minting of a new NFT project. Users turned to bots for sending transactions as much as possible to increase their success rate of minting. This led to 6 million transactions per second on the Solana mainnet, which jammed the network. Moreover, as Solana transmits consensus messages as a special transaction message between validators, the heavily congested network also disabled the normal transmission of consensus messages, eventually leading to the loss of consensus. This is not the first downtime of Solana. Last September, the public chain suffered a 17-hour downtime due to the massive trading volume created by on-chain bots during the launch of the hit project Raydium. A 30-hour Solana downtime incident happened at the end of January 2022 when the BTC price plunged from $44,000 to $33,000 during a market crash and created plenty of arbitrage opportunities. Meanwhile, the liquidation/arbitrage bots on Solana, which center on DeFi, kept creating massive transactions, which resulted in network downtime. When comparing Solana to a conventional IT system, we can tell that the downtime resembles a DDoS attack. 「A DDoS (distributed denial-of-service) attack refers to adding traffic from multiple sources to exceed the processing capacity of a network so that real users would not be able to acquire the resources or services they need. Attackers often launch a DDoS attack by sending more traffic to a network than it can handle or sending more requests to an application than it can manage.」 Instinctively, many people would think that Solana’s downtime is rooted in its public chain designs: the monolithic design of Solana inevitably leads to downtime. At the moment, mainstream public chains use two kinds of designs: the modular and the monolithic. The modular architecture refers to a modularized deployment where consensus, storage, and execution are implemented separately so that the collapse of the execution layer will not compromise the security of the consensus layer. At the same time, mainstream designs adopted by Avalanche’s Subnet, ETH 2.0, and Celestia’s Rollup can all diverge massive transactions. On the other hand, although Solana as a whole is designed to enable fast transactions, scalability and security were sacrificed. However, the modular design of a public chain is not the key because although the consensus stayed secure, the individual rollup could still suffer from downtime when facing overwhelming transactions in a very short period. In other words, the modular design just lowered the systemic risks (e.g., a certain rollup could halt but the rest can survive) for the public chain. The gas design is the real reason behind Solana’s downtime, and more network downtime is on the way if the design is not improved. – The gas mechanisms of different chains The figure below shows the gas designs of three mainstream public chains. On Solana, the gas fee is based on the number of signatures. The more signatures a transaction uses, the higher the gas fee. However, the maximum memory capacity of each transaction is fixed, and so is the maximum gas fee per transaction, which helps users easily calculate the cost of sending massive transaction requests. Moreover, transactions on Solana are not sequenced, which means that when the cost of sending massive requests is lower than the profit (arbitrage, NFT minting, etc.), users would use bots to send transactions on a large scale to increase the likelihood of the execution of their transactions. This is also the reason behind the downtime events that took place on Solana. Ethereum and Avalanche share similar gas designs. Both feature the base fee and the priority fee, which creates an inherent sequencing issue because transactions with a higher priority fee would be first executed. As such, although users can still use bots to create massive transactions on Ethereum and Avalanche, their transactions will not be executed no matter how many requests are sent when the priority fee becomes insufficient, and they have to wait in line. Considering the cost of gas, such a design eliminates the possibility of network downtime arising from massive transactions at the economic level. Source[1] – Improvement by Solana Economic isolation has always served its purpose better than methodological isolation. Solana has already started to build its own Fee Market by introducing a concept similar to the priority fee. Meanwhile, Metaplex, Solana’s NFT market, will also adopt a new concept called Invalid Transaction Penalty, which means that users will have to pay a fee for invalid transactions when minting NFTs. Value capture Value capture is the reflection of a gas economy via the market cap of the gas (the native crypto of the chain). The market cap of a native coin is roughly determined by two factors: cash flow and monetary premium. – Cash flow When it comes to charging the gas fee, most public chains follow the same approach: lower the gas fee as much as possible to attract users from Ethereum. From the perspective of cash flow, such an approach is unsustainable. Of the three mainstream public chains, only Ethereum stands with a considerable net cash inflow, although the network is still issuing more Ethers. If we consider additional issuance as a type of subsidy, then the net expenditure of Ethereum per day would be about $25.7 million if the annual issuance rate stands at 3.21%. Solana and Avalanche, on the other hand, have an income of $6,250 and $42,000 a day on average, with a daily net expenditure of $4.6 million and $1.86 million and a yearly issuance rate of 6.93% and 5.22%. The high net expenditure & high issuance rate significantly dilute the market cap of the public chain coins. Source[2] Let’s turn to the destinations of cash flows. Under Ethereum’s current mechanism, the base fee is burned, while the priority fee is offered to miners. Compared with the gas burning and distribution mechanisms of Solana and Avalanche that offer the gas fee to validators, the miner reward is a design that compromises value capture. Ethereum uses the PoW design for block generation, and most of the miners adopt a business model under which tokens that have been mined are sold to cover the mining cost (such as electricity fees and maintenance costs). Therefore, the part of the gas fee paid to miners will most likely go out from the ecosystem. It would be better to give the gas fee to validators because the cost of running a node is not as high as operating a mining factory. Since there are not significant ongoing operating cost, validators are more likely to invest the rewards they’ve received in the nodes, which makes the ecosystem safer without diluting the value of the native coin. Burning fees might be the most direct and effective way to capture valuee and benefits both node stakers and token holders. In addition, MEV constitutes another major source of revenue for public chains. According to statistics from Flashbots, from 2020 to now, $600 million worth of MEV has been paid to miners, which is a conservative estimate. Source[3] – Monetary premium Monetary premium refers to the appreciation of a public chain coin in terms of its practical value and value storage. Most existing public chain coins are carrying out massive issuance, which makes them poor value storage, and the practical value forms the backbone of their market cap. The growth of the ecosystem of a public chain coin will create scenarios where it can be used as a payment method. For instance, most NFT transactions are settled with public chain coins. Meanwhile, most emerging public chains also consider the practical value as the primary means of appreciation, which is why they have set negligible gas fees to attract traffic and new users. Meanwhile, some public chains have built foundations worth hundreds of millions of dollars to encourage more developers to build DApps in their ecosystem. The logic behind such an approach is to make big investments to attract users in the initial stage and try to recover the cost later. Conclusion To sum up, the gas design of a public chain will have profound impacts on the future development of a public chain, and a poor design could lead to poor value capture and even performance bottlenecks. When evaluating a public chain project, we can also get a rough picture of its development strategy and future growth through its gas designs.   [1] https://docs.solana.com/implemented-proposals/transaction-fees#congestion-driven-fees,https://ethereum.org/en/developers/docs/gas/,https://docs.avax.network/quickstart/transaction-fees/ [2] https://cryptofees.info/,https://moneyprinter.info/,https://solanabeach.io/ [3] https://docs.solana.com/implemented-proposals/transaction-fees#congestion-driven-fees,https://ethereum.org/en/developers/docs/gas/,https://docs.avax.network/quickstart/transaction-fees/

Crypto News Ethereum

Uniswap Slingshots 45% – Can UNI Blaze Past Its 7-Day Rally?

Uniswap is once again hogging the headlines following the token’s comeback in the wake of optimistic signs that the bear market may be winding down. In the past week, UNI, its native token, has seen enormous growth, as the decentralized exchange’s trading volumes have rivaled those of Ethereum, the blockchain on which it is constructed. Multiple news agencies stated that Uniswap had exceeded the Ethereum network in terms of transaction fees. The flagship DEX collected more than $4 million, surpassing the second-largest blockchain. UNI increased by roughly 45 percent in the last week, reaching $5.46, its highest level in more than three weeks. Uniswap Making Northbound Trajectory The biggest DeFi exchange has been trending upward since the beginning of the week. Looking at the price trend over the last few days, it appears that UNI’s main objective is to close June on a positive note. In addition, the stockpiling of UNI tokens by whales is a significant component in the token’s price bump. After a debilitating first half of the year, rising fees on Uniswap may be an indication that the DeFi market is beginning to recover. UNI total market cap at $4.14 billion on the weekend chart | Source: TradingView.com This year, total value locked (TVL) in DeFi has shrunk by more than 60 percent, according to data from DeFi Llama. Katie Talati, an analyst at Arca, attributes the DeFi exchange’s most recent accomplishment to quickly increasing volatility, which led to a substantial increase in trading volumes. Simultaneously, Ethereum has witnessed a significant fall in user activity, whereas layer-2 solutions are gaining popularity because of their low transaction fees. UNI Facing Bullish Momentum Uniswap is among those that have benefited from the recent market restoration, having lately attempted a price turnaround. UNI is up 2% in the last 24 hours, which is a significant increase for the token since it dropped to $3.39 during the last slump. Faced with the continued bullish advance, there is no selling opportunity for bears in the $5.8 to $6.2 resistance zone, which has been in place for more than 30 days and has been repeatedly retested. Although bears are still prominent in the bull market, bulls do not wish to relinquish their UNI token holdings. This year, Uniswap has lost less than 50 percent of its total value locked (TVL). This week has also seen modest inflows, with the TVL increasing by 11 percent to $5.1 billion. Enhanced participation with Ethereum Layer 2s may contribute to the exchange’s rising popularity. Already embraced by major organizations like Polygon and integrated into other Ethereum-based applications, Uniswap has a large user base. Featured image from Cryptokio, chart from TradingView.com

Altcoins

One Low-Cap Altcoin Skyrockets by More Than 140% in Just One Week As Crypto Markets Rebound

A low-cap altcoin is erupting in the last seven days as the broader crypto markets flash signs of strength toward the end of the week. STORJ, the native asset of Storj, a decentralized protocol designed to provide an end-to-end encrypted cloud storage platform, has more than doubled its value in just one week. From a […]

The post One Low-Cap Altcoin Skyrockets by More Than 140% in Just One Week As Crypto Markets Rebound appeared first on The Daily Hodl.