If you paid attention during your literature classes in high school you're probably familiar with the story in Greek mythology of Icarus and his father Daedalus. If you haven't a quick Google search can fill you in on the details, but to be brief; Daedalus built wings of bird feathers and wax for himself and his son in order to escape an unjust imprisonment by King Minos. While the wings surprisingly worked well and allowed both to soar out over the sea (this is actually one of the more reasonable things to happen in Greek myth, tbh) Icarus ignored his father's warnings and flew up higher and higher towards the sun. Eventually the heat from the sun's rays softened the wax holding Icarus' wings together, eventually causing them to fail and leading to Icarus falling to his doom.
The most common moral taken from this story is that of the dangers of over-ambition and risk taking, but recent events in regards to ETH had my mind taking a more literal view of what happened to Icarus; That the wings were flew so well that they reached a point they could no longer meet their purpose and fell apart.
Prices like an Oil Embargo
With the addition of FARM to Publish0x's tipping scheme and the recently announced contest I decided to deposit some USDC I had sitting in a wallet into their system to see how easy it was and what I could earn from it and...oh...oh dear...
Now, while this is a bit of an extreme example it's not that far off the average I've seen lately with gas fees often being close to and above double the amount I've wanted to deposit. And not just for FARM, from exchanges and liquidity pools to games and other dApps ETH's gas fees have made transactions that could be considered everyday 'retail' level uneconomical.
There is still plenty of activity on the Ethereum Mainnet right now, which means there are a lot of users who have no problem paying these levels of fees for whatever activities they're trying to do on this blockchain. These are most likely traders, stakers, and liquidity providers for who ETH becoming a 'store of value' is a dream come true. However I've started to wonder if ETH has hit a point where it is no longer effective at carrying out its primary purpose for the average person, just like Icarus' wings falling apart as they went higher and higher chasing the sun.
How and When Could Gas Stabilize?
A good part of the rise in both the price of ETH and traffic on the Mainnet can be attributed to the volatility in financial markets across the board, so its reasonable to assume that if those settle we may see a reduction in gas fees fairly quickly. However this could take a significant amount of time as there are a myriad of factors playing into the chaos of the financial sectors even before Reddit declared its war on short sellers.
The establishment of Ethereum 2.0 should result in a many-fold increase in transaction speed, which should clear up the transaction backlogs driving up gas prices. At least, that's the theory. While we're unlikely to see $100+ fees once the shards become fully active, there is also no set amount as to how much gwei it will take to process your average transaction. Even if the cost for a transaction is only a few gwei, if ETH's price keeps rising as it chases BTC then we could still have fees that make microtransactions and "everyday" trades unpractical.
With either of these issues, we're probably looking at 6 months to a year before gas fees reach a level where small dollar transactions will be practical. Ethereum has a large lead in its space within the blockchain environment, but it's not the only platform out there. If platforms like Algorand and Cardano gain traction within the marketplace while offering cheaper transactions they could pull away sizable portions of Ethereum's traffic and create some much needed competition.
In general I find the idea of ETH becoming a store of value to be counter to its primary function of powering the dApps that are built on it's network. It's designed to move, to flow between different accounts allowing all manner of transactions to occur. If too much ETH is locked up and its' price grows it may only become viable for whales to conduct transactions in, losing much of it's promise of improving the lives of common users.
What are you thoughts? Do you think ETH is getting too pricey to be usable by the common person for everyday transactions? Do you think ETH 2.0 will be able to bring gas fees down to a point ETH can act as a common currency for everyone? Let me know in the comments below.