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Developing Several Layer-2 Solutions: ‘The Real Solution’ to Ethereum’s Scalability Issue, Says Ken Timsit

Developing Several Layer-2 Solutions: ‘The Real Solution’ to Ethereum’s Scalability Issue, Says Ken TimsitThe recent surge in Ethereum gas fees can be attributed to the rise in decentralized finance (defi) activity and the growing popularity of layer 2 (L2) chains such as Arbitrum and Optimism, Ken Timsit, managing director of Cronos Labs, has said. Timsit however agreed that the recent Dencun upgrade to the Ethereum network has helped […]

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Arbitrum Outpaces Ethereum in Daily Transactions Amidst L2 Networks’ Surge 

Arbitrum Outpaces Ethereum in Daily Transactions Amidst L2 Networks’ Surge Recent statistics reveal that the layer two (L2) network Arbitrum has experienced a significant increase in daily transactions. On Tuesday, the network’s daily transactions even exceeded those on the Ethereum platform. Additionally, following Ethereum’s Dencun upgrade, other L2 networks such as Optimism have also witnessed an uptick in activity. Arbitrum Transfers Spike Metrics indicate that […]

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Immutable’s zkEVM to eliminate Web3 gaming gas fees

Immutable’s blockchain protocol will allow the game studio to cut out gas fees for users, which is widely cited as a significant barrier to Web3 gaming adoption.

Web3 gaming firm Immutable is set to completely cut out gas fee payments for gamers when its proprietary zero-knowledge proof-based (ZK-proofs) scaling platform goes live in early 2024.

Immutable zkEVM provides the technology for blockchain-based game developers to remove transaction fees from end users, which is touted to create a “frictionless onboarding” experience for gamers.

Web3 games built on blockchain protocols typically require gamers to pay the gas fees paid to network validators for processing transactions. Before the advent of layer-2 scaling protocols, Ethereum-based decentralized applications (DApps) and services relied solely on validators and miners pre-merge to process smart contract operations and their associated transactions.

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Ethereum, Bitcoin users reignite scalability debate as gas fees surge

Ethereum gas fees reportedly breached the $200-mark for certain high-priority transactions in the last 24 hours.

A recent spike in transaction fees on Ethereum and Bitcoin appears to have reignited the debate around solutions for scalability and the role of layer 2s.

Over the last 24 hours, cryptocurrency users began sharing screenshots showing double, occasionally triple-digit transaction fees on Ethereum and Bitcoin.

One screenshot showed gas fees were as high as $220 for a high-priority transaction on Ethereum while other screenshots showed figures around the $100 mark.

Bitcoin users meanwhile, reported fees that were around $10 for high-priority transactions. While this is relatively low, the average Bitcoin (BTC) transaction cost has hovered around $1 over the last three months, according to BitInfoCharts. BTC fees haven’t been this high since May.

At the time of writing, a transaction from an Ethereum hot wallet comes with a network cost of $45.65 for a $300 transfer on decentralized exchange Uniswap, according to a test transaction conducted by Cointelegraph.

Network cost on Ethereum hot wallet Rabby Wallet. Source: Rabby Wallet

The rise in gas fees have prompted proponents of Solana and other blockchains to flaunt how much cheaper transactions are on those respective chains.

One X (formerly Twitter) user, “Bobby Apelrod” noted that Solana only charges $55-60 per minute for all Solana users, while each “poor Ethereum user” had to pay that much for a single transaction.

“Currently, #PulseChain gas fees are 4'000X cheaper than Ethereum and 14'000X cheaper than Bitcoin,” said “KaisaCrypto.”

The price of network fees is dynamic and is a product of demand or how congested the network is. An increase in on-chain activity often occurs in bull markets or when market sentiment is strong, but an added side effect is the impact on lower income users.

“How does this help the unbanked and lower income population,” Lopez iterated in a post which showed a “high priority” Bitcoin transaction fee of $10.50 on Nov. 9.

Prior to the fee spike, transaction costs on Ethereum averaged out at $11.35 on Nov. 8, according to BitInfoCharts. A few weeks earlier on Oct. 14 it fell as low as $1.40 — the lowest level recorded in 2023.

Gas fee on Ethereum peaked at $196 on May. 1, 2022, while fees were consistently above $20 between August 2021 and February 2022.

Gas fees on Ethereum over the last three years. Source: BitInfoCharts

Scale the base layer or rely on L2s?

Bitcoin and Ethereum developers chose to prioritize decentralization and security at the base layer and offload much of its execution environment to layer 2s to make transactions cheaper.

The Lightning Network is used to scale Bitcoin, while Ethereum has a handful of layer 2s specifically focused on making Ethereum faster and cheaper, such as Arbitrum, Optimism and Polygon.

Transactions are often less than $1 on these layer 2 networks but not everyone agrees it is the right way to tackle scalability.

Related: Ethereum gas fees cool down after May memecoin frenzy

Justin Bons, founder of cryptocurrency investment firm Cyber Capital believes the base layer should be the only transaction environment.

He advocates for monolithic blockchain architectures in which consensus, data availability and the transaction execution is all handled on the base layer. Solana is an example of this.

Bitcoin and Ethereum on the other hand, are modular blockchains because they offload some transactions to a second layer.

However, critics have pointed to several outages on Solana due to network congestion, arguing that a modular blockchain design is a better approach to solve scalability.

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Visa Exploring Ways of Paying Transaction Fees on the Ethereum Blockchain With Just a Card

Visa Exploring Ways of Paying Transaction Fees on the Ethereum Blockchain With Just a Card

Payments giant Visa is exploring the possibility of allowing users to pay transaction fees on the leading smart contract platform Ethereum (ETH) using a card. In a new company blog post, the credit card titan says that paying gas fees using a card may simplify the process of transacting over Ethereum. According to Visa, users […]

The post Visa Exploring Ways of Paying Transaction Fees on the Ethereum Blockchain With Just a Card appeared first on The Daily Hodl.

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Anchorage Digital opens up DeFi voting for custody clients

Anchorage joins AAVE, Lido and BitDAO in adopting the off-chain voting platform Snapshot.

Institutional clients of crypto custody firm Anchorage Digital can now voice their concerns on proposals for tokens they hold without paying hefty gas fees.

According to a May 16 statement, Anchorage will integrate off-chain, gasless multi-governance client Snapshot to allow its “token-holding community users” to vote on governance proposals with their tokens, without incurring any gas fees.

It said all voting will take place within Anchorage’s custody with no movement of funds.

Snapshot is used by decentralizeprotocols like AAVE (AAVE), Lido (LDO), and BitDAO. It records the voting off-chain — meaning transactions are not publicly recorded on the blockchain.

The advantage of this approach is “convenience,” according to Anchorage:

“The tradeoff for such convenience comes in the form of on-chain guarantees; Snapshot voting is free because votes are counted off-chain and thus do not require gas payments. The responsibility to enforce the decision is typically entrusted to a multisig that the protocol team operates.”

Anchorage said it currently supports “over 60 ERC-20 tokens,” with plans to enable support for all applicable future ERC-20 tokens.

Related: Anchorage forms custody network with five crypto exchanges

It was announced in October 2022 that Anchorage had extended its operations to Asia with five new institutional partners including Bitkub, DreamTrade and FBG Capital. It stated Asia’s consumers “have adopted crypto with enthusiasm.”

Snapshot has recently been employed to collect votes from AAVE and LDO token holders regarding each of the protocol’s latest upgrade or governance proposals.

The voting system also proved beneficial for AAVE users who mistakenly sent their tokens to the wrong address.

In July 2022, LidoDAO, the governance body that controls Lido Finance, a liquid staking solution for proof-of-stake cryptocurrencies, conducted a Snapshot vote on sending 1% of LDO’s token supply to DragonFly Capital for $14.5 million which was rejected by token holders.

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Worth it? Trader spends $120K on gas buying $155K worth of a memecoin

A user spent an additional 76% of their total purchase price in gas fees on a single memecoin trade.

A single trader just spent a staggering 64 Ether — equivalent to $118,000 — in gas fees purchasing $155,000 worth of a memecoin called Four (FOUR).

According to an update from the popular blockchain tracking service Whale Alert, the lone trader paid an astonishing $119,157 in Ether (ETH) to complete a Uniswap trade that swapped 84 Wrapped Ether (WETH) for 13.8 billion FOUR tokens.

It appears as though the trader voluntarily increased their gas fee to speed up the transaction time to purchase the memecoin. According to pseudonymous Twitter user FlurETH, the trader in question is sitting on 133 ETH ($245,667) in unrealized profit on their investment in the memecoin.

High gas fee transaction details. Source: Etherscan.

Gas fees on the Ethereum network have become the subject of debate amongst the crypto community, with a number of prominent Etheruem advocates praising the heightened activity for its revenue generating effects and long-term deflationary pressure on the supply of Ether.

Others have leveled criticism at the fees, claiming that unless the network becomes more “affordable” mass adoption will never be achieved.

As reported by Cointelegraph, one of the main drivers behind the increase in Ethereum gas fees comes from the recent memecoin mania, driven in large part by the frenzied buying of a new memecoin called Pepe (PEPE). At the time of publication, the average Ethereum transaction fee is sitting at $22.98, the highest level recorded since May 12, 2022, when the average fee reached a peak of $31.11.

Average Ethereum transaction fees in the past year. Source: Etherscan

Another major reason behind the drastic uptick in gas fees comes from the maximal extractable value trading bot that is front-running memecoin trades en masse. The notorious MEV bot and “sandwich” attacker, known only by the pseudonym jaredfromsubway.eth, has been profiting significantly from the heightened network use.

A sandwich attack occurs when an attacker “sandwiches” a victim’s transaction between their own two transactions in order to manipulate the price and profit from the user.

On April 18, Jared cleared a whopping $950,000 in profits from the sandwich attacks. Jared has also been one of the largest gas spenders on the Ethereum network. On April 20, Jared used 7% of the total gas on the network and spent 455 ETH in transaction fees.

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Subway-themed trading bot makes millions using ‘sandwich’ attacks

The anonymous MEV bot operator’s best day was April 18, where he profited about $950,000.

An anonymous Maximal Extractable Value (MEV) bot operator has cashed in well over $1 million this week by executing “sandwich attacks” against buyers and sellers of two new meme coins.

The wallet address, linked to the Ethereum Name Service (ENS) domain “jaredfromsubway.eth,” made $950,000 from the sandwich attacks on April 18 and profited about $300,000 and $400,000 on April 17 and 19, respectively, according to an April 19 tweet from nonfungible token data platform Sealaunch.

The bot’s ENS domain is a likely tongue-in-cheek nod to the popular sandwich chain and its disgraced former spokesperson Jared Fogle.

Over a 24-hour period between April 18 to 19, 7% of all Ethereum gas fees were spent by the MEV bot, Sealaunch explained in a separate post.

A large proportion of the profits came from attacks on trading activity relating to two new meme coins, Pepe (PEPE) and Wojak (WOJAK), which has helped propel jaredfromsubway.eth to the become the largest gas guzzler over the last day and week, crypto researcher Matt Willemsen explained:

A sandwich attack occurs when an attacker “sandwiches” a victim’s transaction between their own two transactions in order to manipulate the price and profit from the user.

This is possible because the victim’s transaction is first sent to the mempool where it waits to be added to the next block. In the meantime, the attacker sets one transaction with a high gas fee — to ensure it is accepted first — and another transaction with a lower gas fee to ensure it is accepted after the victim's transaction.

The attacker profits by buying the victim’s token at a price cheaper than market value, then sells it within the same block — taking in the difference between the revenue from the transaction minus the gas fees.

The large profits pocketed by jaredfromsubway.eth came from nearly $1.2 million being spent on gas fees between April 18 and 19, according to data shared by Thomas Mattimore, head of platform at the Reserve Protocol.

The MEV bot operator has spent over $7 million in gas fees across 180,000 transactions, according to Sealaunch.

While some are finding the humor in the MEV bot’s domain name and actions, not all are happy.

Related: Tether blacklists validator address that drained MEV bots for $25M

One analyst for on-chain analytics firm Glassnode questioned the “value” of the work jaredfromsubway.eth is providing to the world.

Other Twitter users went one step further, expressing their hatred and frustration toward the MEV bot operator.

According to MEV Blocker, MEV bots have extracted more than $1.38 billion from Ethereum users attempting to trade, provide liquidity and mint NFTs.

Several MEV Block projects have been launched in recent months to help protect Ethereum users from sandwich attacks.

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NFT Marketplace Looksrare Launches Version 2, Cutting Protocol Fees by 75% and Introducing Bulk Purchases

NFT Marketplace Looksrare Launches Version 2, Cutting Protocol Fees by 75% and Introducing Bulk PurchasesLooksrare, the non-fungible token (NFT) marketplace, has launched version two, also known as v2, which reduces protocol fees by 75%. According to statistics from Dune Analytics, Looksrare was the tenth-largest NFT marketplace in terms of trader count during the past week. NFT Market Protocol Looksrare Launches v2 NFT marketplace Looksrare announced the launch of version […]

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