Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $1,094 trillion. Bitcoin has dropped by nearly 3% this week. Ethereum lost almost 1% over the past seven days. XRP is down by nearly 5% this past week. Almost all altcoins are trading in the red, with very few exceptions. The DeFi sector maintains the total value protocols (TVL) at around $40 billion. Crypto…
- The founder of Ethereum, Vitalik Buterin, proposed a solution to reduce the cost of transaction fees on Ethereum’s Blockchain.
- Lower-transaction fee proposals have coincided with Ethereum rallies and contributed to positive investor sentiments.
In a Twitter thread on Saturday, Vitalik suggested new techniques for handling data transfer over the network, which could reduce the cost of processing transactions. Additionally, Vitalik talked about an update on Ethereum Layer 2, which involves “blob-carrying transactions.” Also, he speculated that the modifications would significantly cut transaction fees by the year’s end.
Rollups created on Ethereum’s network have recently led to spikes in transaction fees while creating other scalability issues. These rollups, also known as hard forks or Ethereum Layer-2, are branches from Ethereum’s main chain. They share the same decentralized security technology with the main. However, they may operate on a different protocol, depending on participants’ agreement on its network. Supposedly, they are components of the Ethereum development team’s schedule to launch a new version.
Rollups provide temporary reliefs for the main blockchain before the full sharding is accomplished on Ethereum 2.0. Despite the existing expensive costs of processing transactions on Ethereum layer-1, rollups look to subsidize users’ transaction fees by reducing traffic on the main chain.
Proposals to reduce transaction costs increase investors’ interest in the cryptocurrency. A survey conducted by CoinShares using cryptocurrency’s bi-monthly funds as a metric reported a boost in investors’ sentiment for Ethereum. This survey measured investors’ opinions on a digital currency based on the investment.
CoinShares ranked cryptocurrencies in terms of investor sentiment as a function of allocation. Again, Ethererum came out on top of other promising coins like ADA, SOL, and DOT — beating them by a large margin.
Prior Solutions to Ethereum’s High Transaction Costs
This is not the first time Buterin has expressed concern about high transaction costs. The Ethereum co-founder made early attempts to curb gas cost in the layer-2 network on November 27, 2021. In addition, Buterin notably introduced the multidimensional pricing of resources in a blog post titled “Multidimensional EIP-1559”. The team implemented EIP-1559 in August and substantially slashed transaction costs.
After implementing the proposal, it pulled over 1.36 million ETH tokens out of circulation. This supply shortage is suspected to be among the elements responsible for Ethereum’s renewed uptrend.
Ethereum Price Action Analysis
Crypto experts and analysts consider the current price of Ethereum to be pivotal. They claim that $3000 is a crucial psychological level. Lastly, towering above this point could have bullish tendencies and vice versa should price decide to turn around.