Blockchain analyst Lookonchain notified Crypto Twitter about a recent transaction involving an Ethereum user who paid 288 ETH ($704,000) as network fees to process a single transaction.
The transaction was executed on block 20918439 with a high rate of over 13.73 million Gwei per gas limit. Since the gas used was 21,000, it attracted a high network fee for the transfer.
The fee is higher than the average fee on the network and highlights the challenges associated with Ethereum’s decentralized finance (DeFi) ecosystem.
What Likely Happened?
A possible cause for the high fee is congestion in the Ethereum network which results in high gas prices. As the transaction was processed, network congestion may have worsened, and gas prices surged even higher. The user may have unknowingly set a very high gas price, hoping to prioritize their transaction.
Complex smart contracts are another culprit for high transaction fees. This usually comes from factors like multiple contract interactions, nested contracts, and complex logic. These transactions include trades and non-fungible token (NFT) minting.
Complex smart contracts are like mathematical equations, the more variables and operations, the harder it is to solve. This requires more computational power, increasing the fee.
Smart contract bugs can also consume excessive gas, slow down transactions, and increase network fees. These bugs can be simple mistakes, like infinite loops or unnecessary computations, or more complex issues, like security vulnerabilities.
What can be Done?
To avoid excessive fees on Ethereum, users can leverage layer-2 Scaling Solutions like Base and Polygon to enable faster and cheaper transactions. These include off-chain transactions, sidechains, optimistic rollups, and zk-rollups. These technologies reduce congestion on the main Ethereum network, lowering fees and increasing efficiency.
DeFi platforms can improve user experience by simplifying user interfaces to reduce errors. Decentralized apps can integrate estimation tools for providing accurate predictions, Gas-optimization techniques to minimize gas consumption, and dynamic fee adjustment features.
Since high network fees can deter users from adopting DeFi and threaten viability, particularly for small transactions, developers can adopt solutions to help users enjoy a smoother and more cost-effective experience.
