- Ethereum gas fees hit a maximum of 710 gwei
- Current average gas fee stands at 350 gwei
- Ethereum’s price drop to $1,950 risks $92.2 million in DeFi liquidations
- A further drop to $1,790 could liquidate $271 million in DeFi assets
Surging Gas Fees Amid Ethereum’s Decline
Ethereum’s recent price volatility has caused significant fluctuations in gas fees, highlighting the network’s current congestion and demand dynamics. As Ethereum’s value tumbled to nearly $2,100, users witnessed the maximum gas fee spike to an astonishing 710 gwei. On average, gas fees have settled around 350 gwei, still indicating heightened network activity.
Gas fees, the cost of executing transactions on the Ethereum network, increase with demand. The recent surge reflects both heightened trading activity and congestion, as users rush to adjust their positions in response to the price drop. For regular users and developers alike, these elevated fees underscore the network’s scalability challenges.
Potential DeFi Liquidations Loom
The impact of Ethereum’s price drop extends beyond transaction fees, threatening the stability of the decentralized finance (DeFi) sector. DeFi protocols, which rely on Ethereum as a key asset, face significant liquidation risks if Ethereum’s price continues to fall.
- At a price of $1,950, approximately $92.2 million worth of crypto assets within DeFi protocols are at risk of liquidation. Liquidation occurs when borrowers’ collateral falls below the required threshold, forcing the sale of assets to repay loans.
- If Ethereum’s price declines further to $1,790, the liquidation risk escalates dramatically, with an estimated $271 million worth of DeFi assets potentially being liquidated.
