Ethereum network experienced a surge in gas fees hitting 8 month high due to demand for the experimental token standard ERC-404.
The gas fees for the Ethereum network reached their highest point in eight months amidst a flurry of demand for a new experimental token standard unofficially referred to as ERC-404.
On February 9, the average price of gas for the Ethereum network reached its highest point of 70 gwei, which is equivalent to $60 for a normal transaction. The gas costs peaked at 377 gwei, a level unseen since May 12, 2023.
The jump in the price of gas can be attributed to a number of different variables; however, the spike occurred when the excitement surrounding the ERC-404 token standard started to gain momentum throughout the cryptocurrency industry.
On February 5, a project known as Pandora launched the experimental standard, which was the event that officially started off the ERC-404 wave. Since then, it has had a total volume of over $474 million and a gain of over 6,100%. The goal of ERC-404 is to connect ERC-721 nonfungible tokens (NFTs) to ERC-20 tokens.
This will make it possible for what some people have referred to as fractionalized NFTs. This will enable many wallets to each possess a portion of a single NFT and use that share to trade with or stake in loans.
The new breed of token, despite being attached with the prefix “ERC” is not officially sanctioned in any way. On February 9, “ctrl,” one of the engineers behind the Pandora project, stated that the company is actively working on “dramatically reducing” the amount of money spent on gas.
“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%.”
In accordance with the assertions of PopPunk, a pseudonymous user on X who is also the co-founder of the gas-auditing company Gaslite, an ERC404 token consumes nearly three times the quantity of gas that is necessary for ordinary NFT transactions.
A surge in activity on the decentralized exchange protocol known as Uniswap was the primary cause of the majority of network traffic on February 9.
Pandora, DeFrogs, and a roster of other ERC-404 projects created significant trading volumes, according to data provided by the cryptocurrency aggregator Birdeye. These projects boasted a combined trading volume of more than $600 million in the previous week.