How a frog-themed token shapes Ethereum gas fees in 2023

How a frog-themed token shapes Ethereum gas fees in 2023

Blockchain
June 3, 2023 by secret
136
We all know the cryptocurrency world is attached to memes and entertainment. From the Dogecoin meme coin that got the interest of Elon Musk to the Shiba Inu cryptocurrency that tried overcoming it, memes are catchy and thriving in the crypto market. Most of them are built within the Ethereum ecosystem, as the community is
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We all know the cryptocurrency world is attached to memes and entertainment. From the Dogecoin meme coin that got the interest of Elon Musk to the Shiba Inu cryptocurrency that tried overcoming it, memes are catchy and thriving in the crypto market. Most of them are built within the Ethereum ecosystem, as the community is one of the most united, so if you’re looking for the best way to buy Ethereum, you’ve got plenty of support. 

The latest and funniest coin is Pepe, which reached the crypto sector after becoming a famous meme a few years ago. The cartoon-based drawing is used as a mood for almost any emotion, so Matt Furie used Ethereum to launch the Pepe coin. The creator aims to increase the popularity of meme coins. 

However, what makes this cryptocurrency unique, and why does it influence Ethereum gas prices? 

An image showing the Ethereum coin symbol. Source: Pixabay

What’s so special about Pepe?

The deflationary meme coin is unique as it enhances the meme culture spread among communities similar to cryptocurrency. However, the currency offers something only a few cryptocurrencies do: rewarding long-term stakers and incentivizing holders for longer periods to increase the chances of the coin’s success. At the same time, the no-tax policy encourages holders to boost Pepe since a wider audience can access and use it.

The burning method of Pepe is also unique because, despite the 420,690,000,000,000-maximum supply, a portion of the coins are frequently removed from circulation to maintain scarcity and help users commit to the project.

Pepe is secured through the Ethereum blockchain by the PoS consensus mechanism, where decentralized validators stake ETH to secure the network and process transactions.

What’s the deal with Pepe and Ethereum gas fees?

The pepecoin has surged in popularity since its launch in April. This caused the median gas price to increase to more than 50% in the last 12 months, reaching 150 gwei (one gwei is a billionth of an ether). The demand for pepecoin has changed the network drastically, affecting even liquidity pools. It has been disclosed that Pepecoin transactions have burned around $10 million of gas since the launch.

Although similar meme coins have seen this success in the past market capitalization, such as CHAD and DINO, this time, things are different. While Ethereum is fighting to lower gas prices, the increased demand for a particular cryptocurrency is against the upgrade efforts. 

The latest Ethereum update, Shanghai, is supposed to contribute to diminished gas fees as it gets more difficult for miners and investors to get ether. At the same time, as the network struggles with scalability, a suddenly increasing number of transactions usually leads to network congestion.

How does Ethereum mitigate challenges?

The latest completed update on Ethereum was Shanghai, whose primary purpose was to allow users to withdraw their staked ether. The next target is to address scaling concerns to make transactions faster and cheaper, considering Ethereum’s high fees.

At the same time, developers will benefit from lower costs through the EIP-3855 and EIP-3860 updates in an effort to encourage activity on the blockchain regarding creating DApps. Many other minor updates will contribute to lowering gas fees while maintaining network productivity.

Why should Ethereum gas fees remain low?

Gas prices are usually affected by network congestion and the complexity of actions made on the blockchain. 

Although Ethereum created the EIP-1559 program to make fees more predictable and help investors not be hit by sudden price changes, when a coin increases in demand, it’s challenging to keep the base fee at a decent limit. And gas fees can’t be considerably lowered because they’re used to compensate stakers for their efforts to maintain the network, which is essential for providing data security.

However, gas prices have become so high that many people prefer to stop mining or investing, as the cost overtakes the profit, which is the case for such a prominent cryptocurrency and network. Besides the updates mitigating smaller costs, there are some ways for users to minimize fees and save money.

Are meme coins important? Or safe to invest in?

Regardless of the coin type on the blockchain, keeping lower gas fees and maximizing transactional time will win over any other feature. However, blockchains should be used for various cryptocurrencies to truly put them to work, which is why discussing the importance of meme coins is necessary.

The blockchain sector is all about communities and groups of people with similar interests who put their efforts into gaining cryptocurrencies and increasing the value of the ones they invest in. 

Meme coins help build these communities easier, as memes always bring people together for entertainment. Since there’s already one formed, it’s easier for the crypto sector to be linked with something with a base. That’s because this type of community also takes the initiative to keep the audience engaged and interested in the common purpose of the network. That’s why Ethereum has one of the strongest communities, whose interests include developing the ecosystem, bringing more updates, and offering support to beginners and users interested in investing.

Still, when investing in meme coins, certain dangers are linked to their stability. Let’s take the example of Doge, whose popularity drastically increased after Elon Musk tweeted about it a few times. However, the coin doesn’t necessarily hold a significant purpose during regular times.

Like in the case of Pepe, who’s just starting to become viral as a cryptocurrency, the risk of holding this coin is that it can increase in value overnight and then drop down dramatically in the following hours, and so on. Its value depends on the hype from social media created by its holders. After that, we can’t say that Pepe or another meme coin will have the same course as Bitcoin or Ethereum, which underwent different challenges over the years and remained reliable.

Bottom line

Pepe the Frog is a famous meme recently introduced in the blockchain sector as a cryptocurrency. Its value surged so drastically that it led to increased gas fees, an issue for which Ethereum is taking action now.



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