Gas fees on Ethereum make DeFi less accessible to new inventors.
Elon Musk has been an avid Dogecoin supporter and calls it the people’s crypto
Responding to a tweet about high transaction fees with Ethereum, Elon Musk simply said “Dooooge” — hyping his favourite crypto but also pointing to how it can be used to make Decentralised Finance (DeFi) more accessible to everyone. The Tesla CEO often uses his Twitter handle to drop suggestions for crypto investors at a time the market is witnessing a global boom, and this is another occasion where he has posted about meme-based cryptocurrency Dogecoin. DeFi systems aim to provide an autonomous and decentralised option for financial services that are otherwise regulated by banks. Most of the DeFi applications are based on the Ethereum blockchain, where the transaction fees are now fairly high, because of the cost of each Ether (ETH) token.
Crypto news portal CoinDesk tweeted a story about the DeFi protocol becoming inaccessible to small investors due to Ethereum's high transaction fees. Musk tweeted a one-word reply under this story, “Dooooge”, referring to his favourite cryptocurrency, the Dogecoin
The transaction fee, or “gas fee” of the Dogecoin remains largely low, hovering around an average of $0.65 (roughly Rs. 50) per transaction, the CoinDesk report said.
This is one of the reasons why Musk, earlier in October, called Dogecoin “the people's crypto”.
Musk still believes that the transaction fees for Dogecoin should go even lower, to make the cryptocurrency viable for day-to-day payments like movie ticket purchases.
Since each transaction on the Ethereum blockchain requires computational resources to execute, they require a transaction or “gas” fee. Gas prices are denoted in “gwei”, which itself is a denomination of Ethereum - each gwei is equal to 0.000000001 Ether.
As per a blog on Ethereum's official page, gas fees help keep the network secure from bad actors who could spam the network.
The gas fee on Ethereum transaction has remained high for a while, owing to the blockchain network's popularity which has become a matter of concern for many people.
In November, beer company Budweiser launched a collection of non-fungible tokens (NFTs), built on Ethereum. For people wanting to purchase of these digital collectibles from the beer brand, a gas fee of $75 (roughly Rs. 5,600) is required to complete the buyout. The high transaction fee on this sale garnered major criticism online.
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