JPMorgan has piled on the ethereum high gas fee issue as a reason why it could end up losing out to competitors like Solana and Cardano. These other projects past significantly fewer transaction fees than ethereum, being one of the major pull points for investors. Due to this, it is increasingly losing users to other platforms who have found they can carry out DeFi activities for much lower fees.
Ethereum Fees Are Too High
In a recent research note, JPMorgan analyst Nikolaos Panigirtzoglou explained that the high fees associated with using the ethereum blockchain have some major drawbacks for the network. Networks with smart contracts capability are in what is essentially an arms race to be the leading platform for decentralized finance (DeFi). Although ethereum remains in the lead, its high gas fees continue to set the network back.
It has led to the migration to other blockchains for services like NFT minting, which can run as high as $300 to mint on ethereum. “If the loss of its NFT share starts looking more sustained in 2022, that would become a bigger problem for ethereum’s valuation,” Panigirtzoglou warned.
Ethereum’s gas fees which are fees paid to miners are currently among the highest in the space. The network’s increasingly high fees have been a cause of concern now for those who frequently use the network, racking up to $44 million in fees paid by users in a day compared to Cardano’s $87K for the same volume of transactions.
ETH Losing Ground In Terms Of Value
Ethereum has not been spared in the market onslaught that has rocked the crypto space. The digital asset which, at its peak, was rivaling and surpassing the market caps of the largest banks in the world has lost about 40% of its all-time high market cap. The asset’s price had briefly touched above $4,800 before tumbling back down to its current price of about $3,200.
ETH recovers above $3,200 | Source: ETHUSD on TradingView.com
Since the crash, ethereum has lost over $200 billion off its market cap. This has brought the digital asset’s valuation down from its impressive $586 billion at its peak down to $373 billion, putting its value below that of banks which it once surpassed.
ETH is currently trading below the 100 and 200-day moving averages, indicating that bears now have a stronger hold on the market. Market-wide sell-offs continue across various assets. ETH is now trading at $3,250 as of the time of this writing.
Featured image from National Daily Newspaper, chart from TradingView.com