Gas fees on the Ethereum network have soared to levels not seen since March 2023, driven by the growing interest in a new experimental token standard known as ERC-404.
Ethereum Gas Fees Reach Peak Levels
On February 9, Ethereum gas prices soared to an average peak of 70 gwei, equivalent to $60 for a standard transaction. Peak gas costs even reached as high as 377 gwei, a level not seen since May 12, 2023.
Several factors contribute to the heightened gas fees, but the primary catalyst has been the hype surrounding the ERC-404 token standard. This excitement has led to a substantial increase in trading activities, particularly those highlighted by projects such as Pandora and DeFrogs.
These ERC-404 initiatives, among others, have generated over $600 million in trading volume in the past week alone, as reported by crypto data aggregator Birdeye. Since its launch, Pandora has seen remarkable growth, with an over 6,100% increase in value and a trading volume exceeding $474 million.
Experimental ERC-404 Standard Aims to Enable Fractional NFTs
ERC-404 aims to link ERC-721 non-fungible tokens (NFTs) with ERC-20 tokens, enabling the creation of fractionalized NFTs. This allows multiple users to collectively own a single NFT and utilize their share for trading or collateralizing loans.
This unofficial decentralized architecture seeks to combine characteristics from both sectors, allowing developers to mint fractionalized NFT collections that users can trade in open markets like Uniswap.
Developers Work to Optimize ERC-404 Protocols
While the standard is currently unofficial, the developers behind Pandora are actively working on optimizing gas costs associated with ERC-404 transactions.
“We’re trying to optimize for gas because that’s a big part of adoption and protocols wanting to integrate… So in certain cases, we’re able to potentially reduce gas fees by like 300% to 400%.” according to PopPunk, co-founder of Gaslite.
PopPunk noted that an ERC-404 token consumes approximately three times more gas than an average NFT transaction.
Uniswap Drives Surge in Ethereum Network Activity
On February 9, the Ethereum network experienced a surge in activity, largely driven by increased usage of the decentralized exchange protocol Uniswap.
Data indicates that a significant portion of the Ethereum burned during this period resulted from activities on Uniswap, attributable to substantial trading volumes generated by projects like Pandora and DeFrogs.
Collectively, these projects recorded a trading volume exceeding $600 million in the past week alone, according to Birdeye data.