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- 1 Increase in Ethereum gas fees to 33% as suggested by Vitalik Buterin.
- 2 Calculations made by him show that an increase of around 40 Million will be made.
The co-founder of Ethereum, Vitalik Buterin suggests increasing gas fees. It will increase the network throughput. During the Ask Me Anything arranged by Ethereum Foundation’s Research Team on January 10th, Buterin highlighted that to increase the throughput of the network, gas fees should be increased. He said that it’s been three years, the longest time in the protocol’s history that no increase occurred in the gas limit.
During the 11th AMA Buterin said, “Honestly, I think doing a modest gas limit increase even today is reasonable.” He also made some brief calculations and said that the fees would rise to around 40 Million. As per Etherscan, the current gas limit is around 30 Million, so this suggests an increase of 33%.
As per Etherscan Genesis, the gas fees in 2015 were nearly 3 Million, in 2016 they came near 5 Million and with time it has increased with the network usage and adoption. However, in the last three years, it has not changed.
By increasing the gas limit, each block can conclude more transactions and this will enhance the network’s overall capacity. Buterin’s proposal thus opens the door for discussion, inviting the community to weigh the potential benefits and possible risks.
Potential Advantages and Disadvantages of Increasing Gas Limit
Some of the potential benefits associated with this increased gas fee implications are increased network throughput, enhanced efficiency, and support for more complex operations. By increasing the gas limit more transactions can be included in each block.
The higher gas limit could potentially reduce the time users wait to process their transactions. With a higher gas limit, Ethereum will continue to host more smart contracts and decentralized apps and can facilitate the enhanced computational demands of these operations.
The challenges and risks that can arise include the impact on network performance, hardware stress, and security concerns. Higher gas limit results in larger blocks which leads to longer processing times and challenges in block propagation, which will potentially impact the network’s performance.
The increased load could put additional stress on the hardware nodes, leading to higher operational costs, and will impact the decentralization of the network. The higher gas limit raises the risk of network spam. Potentially malicious transactions will increase due to more space provided by larger blocks.
As per Etherscan, the average gas price on Ethereum is 35 gwei, which is equal to $1.89. The higher network activity increases gas prices.
Summary
Vitalik Buterin proposed a modest increase in Ethereum’s gas limit. It will enhance the scalability, efficiency, and security. That is the crucial step to sustain growth and relevance. However, this has started a debate among users as the high gas fees impact the user experience by posing a barrier to entry for new users and smaller transactions. It will limit Ethereum adoption and utility.
Amanda Shinoy is one of the few women in the space invested knee-deep in crypto. An advocate for increasing the presence of women in crypto, she is known for her accurate technical analysis and price prediction of cryptocurrencies. Readers are often waiting for her opinion about the next rally. She is a finance expert with an MBA in finance. Quitting a corporate job at a leading financial institution, she now engages herself full-time into financial education for the general public.
