Binance Wallet caused 30X Ethereum Gas Fee Spike
The cryptocurrency wallet linked to Binance, a well-known trading platform, experienced a significant surge in activity over the past 24 hours. As a result, the Ethereum network is currently experiencing unusually high transaction fees. Binance Wallet caused 30X Ethereum Gas Fee Spike
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Binance Wallet Incurs Nearly $850,000 Gas Fees In One Day
On September 21, a crypto wallet known as "Binance 14" experienced a significant surge in transactions, exceeding 140,000. As a result, the wallet consistently incurred gas fees of over 300 gwei, despite the network's average fee being around 10 gwei. This surge in activity resulted in approximately 530 ETH (equivalent to almost $850,000) in gas being utilized on the Binance 14 address today.
The increased activity on the Binance wallet had a temporary impact on the Ethereum network as a whole. Gas fees on the blockchain momentarily spiked from less than 10 gwei to over 330 gwei per transaction, according to Etherscan, a blockchain data tracker.
Gas fees refer to the cost that blockchain users incur or pay validators to conduct transactions or execute contracts on the Ethereum network. Fees are dependent on the network's supply and demand of processing power. Therefore, when a network has a high volume of transactions, there is often a higher demand for processing power, which leads to increased gas fees.
Possible Reasons For The Gas Fee Spike
After the recent incident, Wu Blockchain reported that Binance claimed to have executed its wallet aggregation process during a time when gas fees were low. This was done to facilitate withdrawals and ensure the safety of user funds. However, several members of the cryptocurrency community have provided their opinions on the situation, with some suggesting possible reasons for the spike in gas fees.
Martin Koppelmann, co-founder of the Gnosis chain, stated on the X (formerly Twitter) platform that Binance may be using an inefficient script to consolidate, leading to high transaction costs. Similarly, Scopescan, a blockchain analytics platform, provided a similar analysis of the gas incident.
Due to Binance consolidating funds from long-inactive deposit addresses, the Ethereum network is experiencing congestion, causing Gas fees to surge to 300 gwei.
Adam Cochran, a well-known crypto investor, has raised concerns about the unusually high transaction fees that may be due to Binance's inadequate APIs. In his recent post, Cochran criticized the exchange's technological infrastructure and questioned its ability to secure "hundreds of billions in coins across multiple protocols."
According to CoinGecko's data, Ethereum's current price is below $1,600, indicating a 2.8% decrease in the last 24 hours. Despite this, Ether remains the second-largest cryptocurrency, with a market capitalization of over $190 billion.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.