By
Benjamin Njiri
April 23rd, 2024
In a massive price rally, ETH has moved all the way to $2400 registering over 200% gains since the beginning of 2021.
On Wednesday, April 14, the world’s second-largest cryptocurrency ETH has registered a solid 10% surge hitting its new all-time high of $2397 before the upcoming Berlin hard fork. With this, Ethereum (ETH) has entered a price discovery zone pegging $275 billion in valuations. Meaning at the current price, Ethereum has outsized giant companies like the Intel Corporation.
ETH has had a phenomenal price rally this year with its valuations soaring nearing 200%, so far in 2021. This also means that Ethereum (ETH) has outperformed Bitcoin (BTC) with 2x the margin.
Ethereum’s recent price rally comes on the backdrop of a sharp surge in the DeFi activity on the Ethereum blockchain network. The explosion in the DeFi space has contributed to massive transaction volumes taking place on the Ethereum network.
Interestingly, Ethereum’s latest price rally coincides with its ongoing network development. The Berlin hard fork is scheduled for release later today on April 14. However, the Berlin hard fork is less impactful for the short term. The good thing is it will pave the fork for the London hard fork scheduled ahead in July 2021.
ETH Gas Fee Issue and London Hard Fork
With a massive surge in the DeFi activity, the Ethereum network has been facing strong congestion. This has turned into the miners paradise as the ETH gas fee soared to the highs of $38 during February 2021. Although the situation has now cooled down and the gas feed has dropped to $11.
💸 Another aspect that contributed to #Ethereum's #AllTimeHigh this weekend was the fact that average fees have dropped back to a 5-week low. With fees back to an average of $11.08, this is the lowest since March 5th, allowing for increased $ETH utility. https://t.co/BbqYHz2n5Q pic.twitter.com/gcOsjcK3IR
— Santiment (@santimentfeed) April 12, 2021
However, the Ethereum developers are working out a long-term solution to this. Thus, they have proposed the implementation of the EIP 1559 Fee Market protocol during the London hard fork ahead this year.
The EIP 1559 helps to reduce the volatility of transaction fees on the Ethereum blockchain. But this implementation has drawn the anger of Ethereum miners who are unhappy with this proposition.
Under the current scenario, a user transacting on Ethereum sends the gas fee directly to the miner, included in the transaction block. With EIP 1559 implementation, the gas fee shall directly go to the network as “burn”. This “burn” is the base fee with a very small tip going to the miner.
Thus, the EIP 1559 implementation reduces miner monopoly in the supply/demand auction-style system. On the contrary, Ethereum developers are confident that this proposal will be net positive for its users in the long term.