On-chain data shows 31,700 ethereum (ETH) have been burned in the last week.
The spike is due to the latest mania over pepecoin (PEPE). This development has pushed Ethereum’s transaction costs even higher.
At the beginning of this week, the daily median gas price rose to a 12-month high of 87 gwei – equivalent to one billionth of an ether (ETH).
The frog behind gas fees
Pepe coin (PEPE) is a frog-themed token that has gained immense popularity in the crypto sector, experiencing a remarkable surge in value over the past few days. This has attracted significant attention from investors looking to take advantage of the latest crypto craze.
In just one week, the PEPE token has gained an incredible 665% while rising 585% in the last two weeks.
The PEPE token’s popularity is reflected in its trading volume, which has exceeded that of wrapped bitcoin (WBTC) and USDT, a stablecoin, on Uniswap, reaching an impressive $150m in just 24 hours.
Additionally, the PEPE token has made its way into the top 100 largest cryptocurrencies by market capitalization, with a valuation of over $500m as of May 1.
As more investors flock to PEPE, its value has continued to soar, reaching an impressive market value of $879m in the latest trading session.
A hard fork
The meme coin fear of missing out (FOMO) is believed to be why gas fees in Ethereum is rapidly rising.
As of May 4, transaction fees on Ethereum rose to over $15. While the average gas cost on Ethereum swung between $50 and $70 in 2021, transaction costs fell rapidly during the crypto winter of 2022 only to begin rising this year.
In 2021, Ethereum was upgraded via EIP-1559, which resulted in a portion of all ethereum transactions being burned. As network activity increases, more ETH is destroyed, making the coin deflationary.
Despite EIP-1559 and the overhaul of the gas fee system in Ethereum, transaction fees continue to rise.
As a result, there has been a corresponding increase in gas fees on layer-2 platforms like Arbitrum and Optimism.