The Ethereum gas usage in March was up by about 13 percent compared to February due to an increase in the demand for block space. This is believed to have pushed the value of ether to more than $3,500 during the period.
HashEx DeFi analytics company reveals the demand was mainly increased from the token generation of higher ERC-20 and simultaneously from the increase in layer 2 applications.
The gas here refers to the volume of ether required in interacting with the Ethereum network. Ether is the native crypto coin of the platform. The gas fee is mainly determined by the miners and is not fixed. The factors responsible for the fee rate are supply and demand, the number of transactions, the complexity of calculations in smart contract and power required to process the smart contract.
The ether prices moved from $2,300 to $3,200 in February and March due to increased demand for the gas usage as well as the price recovery of Bitcoin which acted as a catalyst.
Bitrue crypto exchange CMO Adam O'Neill said the gas usage of the Ethereum network has increased lately and this reveals the demand for block space is high even in the bearish trend.
KuCoin crypto exchange CEO Johnny Lyu said the demand will further increase as the Ethereum blockchain application is expanding and this is an example of a typical relationship between supply and demand. Investors entered significantly by mid-March and watch the price rise and this restricted the transaction costs from reaching a record level.
A significant demand originated from just token generation and this was about 125 percent more compared to February. Demand simultaneously came from the popularity of EVM-compatible blockchains like Polygon, Fantom Opera and Avalanche Contract Chain.
Lately, many new EVM-compatible chains are being found popping up, said Dmitry Mishunin, founder of the HashEx crypto exchange.
Ethereum is an open-source blockchain platform equipped with a smart contract feature. It is decentralized and has a native cryptocurrency called ether, which is the second-largest cryptocurrency in the world after Bitcoin with respect to market capitalization. It was conceived in 2013 by Vitalik Buterin, Gavin Wood, Joseph Lubin, Anthony Di Iorio and Charles Hoskinson.
Following crowdfunding development work in 2014, the platform went live in 2015. Since then it has undergone several upgrades and the latest 2.0 allows proof of stake. It is mainly focusing on increasing the transactions by using sharding.
The platform simultaneously allows the creation of NFTs, which are used to represent digital art, virtual real estate, collectibles, sports memorabilia and more.