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Ethereum Strikes Back with Gas Limit Hike, Surpassing 32 Million

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  • Ethereum raises gas limit to 32 million units, improving network throughput.
  • Gas limit increase comes amid ETH’s recent market volatility.
  • Ethereum’s Pectra upgrade will double layer-2 network capacity in 2025.

Ethereum has raised its gas limit for the first time since 2021, signaling a major step forward in boosting network capacity. This adjustment aims to improve transaction throughput and reduce congestion, making ETH more efficient and scalable.

Ethereum raises gas limit to 32 million

Ethereum has raised its gas limit for the first time since 2021. The adjustment increases Ethereum’s capacity to handle more transactions and complex operations, which can reduce network congestion. Majority of the validators approved the change automatically without requiring a hard fork.

The new gas limit reached 32 million units, with a maximum expected capacity of 36 million units. This change follows a previous increase in 2021 when the gas limit was raised from 15 million to 30 million units. Gas is a unit used to measure the computational energy required to perform actions like transactions or smart contract functions on the Ethereum network.

Impact of the gas limit increase

The increase in gas limit improves the network’s throughput by allowing more transactions to be processed in each block. The higher limit also reduces congestion during peak times, which often leads to higher transaction costs. This makes ETH more appealing for decentralized applications like decentralized finance (DeFi) platforms that require stable and scalable networks.

Ethereum’s gas limit adjustment comes at a time of market volatility for the cryptocurrency. ETH recently faced a significant drop of over 17% of its value in one day due to broader economic factors. However, the recent gas limit change may help address some of these concerns by improving the network’s efficiency and capacity.

Although the gas limit increase is considered as a positive move, it remains controversial within the ETH community. Some critics have expressed concerns that increasing the gas limit too much could cause issues for network stability. Experts have pointed out that gas limits above 40 million could lead to performance challenges and hinder network growth.

However, Ethereum’s gas limit increase is a step forward for the network, especially with the Pectra upgrade scheduled for March 2025. The upgrade will enhance layer-2 networks by doubling their capacity. This should further improve Ethereum’s scalability, making it more competitive with other blockchains, such as Solana.

The gas limit change and network upgrades signal Ethereum’s continued development as a platform for decentralized applications and financial services. The network’s growing capacity may attract more users and investors, despite its recent downturn. The blockchain’s performance is expected to improve especially with the additional support from high-profile figures who have shown interest in the token.

Ethereum’s Soaring Gas Usage Signals Growing Adoption and Congestion

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Ethereum’s Mean Gas Usage (7-day Moving Average) has recently hit a notable milestone, reaching a one-month high of 108,861.132. This surge in gas usage is more than just a numerical statistic; it reflects the dynamic and ever-evolving nature of the Ethereum network. In this article, we delve into what this surge in gas usage means for the ETH ecosystem and its users.

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Ethereum: Mean Gas Used (7d Moving Average)

Gas is the unit used to measure the computational work required to process transactions and execute smart contracts on the Ethereum blockchain. It is an essential component of the network, serving as a pricing mechanism to ensure fair allocation of resources and deter spam or malicious activity. When the gas usage increases, it signifies heightened network activity.

Ethereum’s Growing Adoption and Utility

One of the primary reasons behind the recent surge in gas usage is Ethereum’s growing adoption and utility. Ethereum is not just a cryptocurrency; it’s a versatile platform for decentralized applications (DApps) and smart contracts. As more developers and projects embrace ETH for building decentralized solutions, the demand for gas naturally increases.

Two significant drivers of ETH’s gas usage are the decentralized finance (DeFi) sector and non-fungible tokens (NFTs). DeFi protocols enable users to lend, borrow, trade, and earn interest on their cryptocurrencies, all of which involve complex smart contract interactions, leading to high gas consumption. NFTs, on the other hand, have gained immense popularity for their use in digital art, collectibles, and gaming, further contributing to the network’s congestion.

While ETH’s increasing gas usage is a positive sign of its adoption, it also highlights the ongoing scalability challenges faced by the network. The ETH community is actively working on Ethereum 2.0, a major upgrade aimed at transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. This upgrade promises to increase the network’s throughput and reduce gas costs, alleviating congestion issues.

High gas fees can deter users and developers from utilizing the ETH network. It can lead to frustration, especially for smaller transactions or projects with limited resources. Ethereum 2.0’s successful implementation is expected to enhance the user experience by making transactions more affordable and efficient.

Ethereum’s Mean Gas Usage hitting a one-month high is indicative of its growing adoption and utility. However, it also underscores the need for scaling solutions to maintain a smooth user experience. Ethereum 2.0’s transition to PoS is eagerly anticipated as a potential solution to these challenges. In the meantime, users and developers must navigate the network’s congestion while enjoying the benefits of a vibrant and evolving ecosystem. As ETH continues to mature, it remains a significant player in the world of blockchain technology, promising even greater opportunities and innovations in the future.

Ethereum Gas Price Dips; Here’s Why

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Ethereum gas limit has been a bone of contention for the world’s second-largest cryptocurrency ecosystem. This led to an array of EIPs being proposed some of which have been equally controversial to the problem itself.

The recent stats published by Etherscan, however, points to a significant decline in the average gas price since it skyrocketed in mid-2020 and amplified this year. The reduction was subtle but notable and there is more than one reason for it.

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Ethereum Gas Price Dips; Here's Why 3

Reasons For Ethereum’s Gas Getting Cheaper

The first reason was definitely the gas limit [block size] that was increased by 20%. ETH Miners have raised the network’s gas limit to approximately 15 million for the first time to relieve transaction congestion in the blockchain.

Previously, the gas limit was adjusted to a ceiling of 12.5 million. It was later raised after suggestions from Ethereum Creator Vitalik Buterin as well as major miners, as a temporary fix to rising network fees.

According to Ethereum proponent and investor, Anthony Sassano there are a couple more factors at play. He stated that the latest reduction could also come from reduction could come from the broader use of Flashbots, which is allowing MEV extractors to bypass the mempool.

Flashbots is a platform that supports a transparent Miner Extractable Value [MEV] ecosystem. This organization has been long positive for the reduction of gas price and contribute more than 58% of hash rate, thus surpassing the threshold where the naysayers can no longer compete.

While the aforementioned factors are short-term solutions to the gas menace, in the longer term, it is the development of Ethereum 2.0 that is said to cut down the high fees as well as network congestion. Sassano opined that layer 2 and other blockchains are taking the load off layer 1 which has slashed the network congestion and hence the price.

The investor also went on to speculate that the cryptocurrency market is relatively quiet off late which could lead also to less activity.

Ethereum Gas Crisis Might Not Be Solved By EIP 1559

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Ethereum’s spectacular performance throughout the past several months has been haunted by its underlying network’s transaction fees which are precisely at their highest levels ever. Ethereum gas price woes have caused severe pain to the users of the network. Among the numerous improvement proposals that were discussed, the one that stood out was the controversial EIP 1559.

The advocates of this proposal often tout EIP 1559 as a potential solution to bring down the transaction fee caused by the DeFi upsurge, NFT, and stablecoin explosion. But CoinMetrics, in a latest verdict, stated that it might not fix the current high gas prices and make the transaction fees significantly less expensive.

According to the recent Ethereum Gas Report by the platform, high transaction fees are fundamentally a scalability problem. Hence, since the ETH network can only carry out a few hundred transactions per block, the problem of high fees will continue to linger as long as the usage of decentralized applications [DApp] keeps rising. Gas prices will continue to be high as long as there’s high competition for block space.

Having said that, the report also went on to acknowledge that Ethereum scalability solutions are on the way, which could potentially be the “true long-term solution” towards decreasing transaction fees.

“Although it likely won’t fix the high fee problem, EIP-1559 will help improve Ethereum’s user experience by making fees more predictable. EIP-1559 should help reduce variance in gas fees and give users a clearer picture of the actual fee they’ll need to pay.”

So What Will Lessen The Ethereum Gas Crisis?

According to CoinMetrics, several layer 2 solutions and Ethereum 2.0, could solve the problem in the long-run.

Through different ways, the ETH network’s scalability solutions could increase the number of transactions that can be processed per block. This, in turn, will facilitate in alleviate the congestion that has resulted in high fees. The report further mentioned,

“There’s a lot of progress being made towards L2 solutions, including Optimism, Loopring, and Immutable X, just to name a few. Thanks to the debate around EIP-1559, Ethereum 2.0 may even come sooner than previously planned. But most solutions have a lot of complexities, and it will take time to incorporate scalability solutions across the network.”