Ethereum Network Congestion: Who’s to Blame?
Ethereum transactions have been fluctuating daily, having fallen below 500,000 for the first time in 5 months while transaction fees rose to nearly USD 1 between June 30th and July 2nd. MyCrypto, an Ethereum wallet, blames FCoin, a Chinese cryptocurrency exchange.
FCoin was created by a former Huobi, another crypto exchange, CEO and started working in 2018. They are a centralized exchange that manages both the private keys and the funds of their users. They have decided they would let the community choose which tokens would be listed on the platform, and that is done through the exchange giving mass airdrops to their users. This creates a huge flow of unnecessary transactions in the Ethereum network.
MyCrypto, through their official Twitter profile, has criticized this course of action, calling it irresponsible and stupid. MyCrypto maintains that the company could use a pool or a voting mechanism, but chooses to congest the network instead, creating high transaction fees for everyone.
Vitalik Buterin, co-founder of the Ethereum platform, meanwhile, proposes an alternative way of bringing down transaction fees. In a paper, posted in the Ethereum research forum, he writes, “If you value a transaction getting included right now at USD 1, you would be willing to bid anything up to USD 1, but if everyone else is bidding USD 0.05, then you could keep more money by bidding USD 0.08 instead.”
Users would bid a price of their choice for the inclusion of their transaction. Once the auction is over, the lowest fee the miner is able to accommodate will be applied to everyone. The main idea is the preservation of a minimum transaction fee.