Ethereum fees spike as FCoin listing competition clogs network

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Congestion worries mount as yet another big event looms: the Augur launch.

Ethereum gas prices (transaction fees) have been seen spiking up from its usual $0.01 to around $0.8. The fees have gone down to around $0.5 as of last check.

According to ETH Gas Station, the top 10 “gas guzzlers” were primarily token projects participating in China-based exchange FCoin’s recently launched Growth Project Market (GPM) listing contest, which pushed token projects to call on their communities to deposit their token to FCoin’s exchange. The 20 projects with the most deposits get listed on the exchange.

“From now on till 0:00 on July 1st, 2018, the tokens with top 20 total number of deposit accounts will be eligible for the first listing on the FCoin GPM on July 2, 2018. We will open the ranking page on June 28, 2018 (Note: Before the page goes online, the number of deposit accounts will normally accumulate). After July 1st, 2018, we will count the top 5 of the “The cumulative deposit number ranking” at 0 points each day, and will list these tokens on the second day. The duration of this listing rule is subject to future announcements,” FCoin wrote.

This bumped up FCoin’s daily volume to $17.3 billion, which is good for the exchange. However, most of the tokens moving to FCoin (and in existence in general) are built on Ethereum, and thus, clogged the network and spiked up fees.

#Binance has temporarily increased Gas price on withdrawals to 180 Gwei until the congestion on the $ETH network reduces.
Withdrawal fees will remain the same during this period. pic.twitter.com/LP4rwmIhxB

— Binance (@binance) July 2, 2018

While this congestion period may be short-lived, another project launch is right around the corner. And fears of even more congestion down the road are rising.

Augur, a decentralized oracle and prediction market on Ethereum that has been in production since 2014, is set to launch on the mainnet on July 9. On this date, all of its 11 million REP tokens will be moving around in the Ethereum network, which means if the Ethereum network can’t handle it well, it will be CryptoKitties all over again.

Corey Miller, an investment analyst at BlockTower Capital, pointed out in a series of Tweets that  there might be trouble down the road, stating that “Ethereum doesn’t handle complicated so well.”

1/ For some reason no one seems to be talking about the @AugurProject launch on July 9.

If it successfully launches, it will be the most complicated dApp to ever launch on Ethereum (kudos to @joeykrug and the team).

— Corey Miller (@coreyj_miller) June 27, 2018

3/ But the thing is, Ethereum doesn’t handle complicated so well.

Complicated = increase in gas consumption

— Corey Miller (@coreyj_miller) June 27, 2018

4/ Simple math:
Eth block are essentially at capacity at 8m gas per block (blocks are close to 100% capacity according to @ETHGasStation) … so with not that much “demand” Ethereum is close to capacity at the moment.

— Corey Miller (@coreyj_miller) June 27, 2018

5/ To create just one market on @AugurProject consumes ~3M gas.
To create an order costs ~500k gas.
To fill an order ~ 800k gas, etc.
Source: Augur github

— Corey Miller (@coreyj_miller) June 27, 2018

6/ So it’s easy to see if there is only marginal demand for Augur post launch, we can have a “cryptokitties-esque” situation here. Over six months later though, the narrative will likely be quite different (in a much more negative sense).

— Corey Miller (@coreyj_miller) June 27, 2018