February 6, 2025
Ethereum, Bitcoin users reignite scalability debate as gas fees surge

The recent spike in Ethereum and Bitcoin transaction fees seems to have reignited the debate around scalability solutions and the role of Layer 2.

Over the past 24 hours, cryptocurrency users have begun sharing screenshots showing Ethereum and Bitcoin transaction fees reaching double and sometimes reaching triple digits.

One screenshot showed the gas fee for a high-priority transaction on Ethereum was as high as $220, while other screenshots showed the figure to be around $100.

Meanwhile, Bitcoin users reported fees of around $10 for high-priority transactions. While this number is relatively low, average Bitcoin (BTC) transaction costs have been hovering around $1 over the past three months, according to to BitInfoCharts. BTC fees have never been this high since May.

According to test transactions conducted by Cointelegraph, as of this writing, the network cost for a $300 transfer on decentralized exchange Uniswap from an Ethereum hot wallet is $45.65.

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

Rising gas fees have prompted Solana and other blockchain proponents to show off how much cheaper transactions are on these respective chains.

One

“Currently, #PulseChain gas fees are 4’000x cheaper than Ethereum and 14’000x cheaper than Bitcoin,” explain “Kaisa Cryptocurrency.”

The price of network charges is dynamic and is a product of demand or network congestion levels. Increased on-chain activity typically occurs during bullish markets or when market sentiment is strong, but another side effect is the impact on low-income users.

“How does this help the unbanked and low-income people,” Lopez iterative One post showed that “high priority” Bitcoin transaction fees on November 9 were $10.50.

Before fees spiked, Ethereum transaction costs averaged $11.35 on November 8, according to to BitInfoCharts. A few weeks ago on October 14, the price fell to $1.40, the lowest level recorded in 2023.

In May, Ethereum’s gas fee peaked at $196. January 1, 2022, while the fee will always be higher than $20 from August 2021 to February 2022.

Ethereum’s gas fees in the past three years. Source: BitInfoCharts

Extend the base layer or rely on L2?

Bitcoin and Ethereum developers chose to prioritize decentralization and security at the base layer and moved much of their execution environment to Layer 2 to make transactions cheaper.

The Lightning Network is used to scale Bitcoin, while Ethereum has some layer 2s dedicated to making Ethereum faster and cheaper, such as Arbitrum, Optimism, and Polygon.

Transaction fees are typically less than $1 on these layer 2 networks, but not everyone thinks this is the right way to address scalability.

related: Ethereum Gas Fees Cool After May Memecoin Frenzy

Justin Bons, founder of cryptocurrency investment company Cyber ​​Capital, believes that the base layer should be the only trading environment.

He advocates a holistic blockchain architecture in which consensus, data availability and transaction execution are all handled on the base layer. Solana is an example.

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

However, critic Pointed out several outages in Solana due to network congestion, and believed that modular blockchain design is a better way to solve scalability.

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