Ethereum's on-chain fees soar as meme coin frenzy escalates

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Ethereum (ETH) and Solana have experienced a significant increase in trading activity due to the rising popularity of meme coins, generating over $190 million in gas fees on Ethereum in the weekly period, a two-year high. According to the latest newsletter from on-chain data firm IntoTheBlock, the potential annualized rate exceeds $10 billion.

Ethereum’s fee-burning mechanism has led to a reduction of 33,000 ETH in supply, roughly valued at $125 million. While this deflationary aspect benefits ETH holders, the average transaction fee on the mainnet has spiked to $28, pricing out many users.

Similarly, on Ethereum’s layer-2 (L2) blockchain Arbitrum, fees have climbed above $1 for the first time since the Nitro upgrade in June 2022. However, the upcoming Dencun upgrade for Ethereum is expected to alleviate the high gas prices on L2s starting next week.

On meme coins with rising prices, PEPE has seen a 600% return, outpacing other crypto from the same niche. This surge has resulted in 91% of PEPE holders currently profiting from their investments. Despite PEPE’s success, it has a lower holder count at 170,000 addresses compared to SHIB’s 1.3 million and DOGE’s 6.3 million.

The meme token craze has not been limited to Ethereum, as Solana’s decentralized exchanges (DEXs) witnessed a staggering $15 billion in trades this week. This volume is close to Ethereum’s $20 billion, according to DeFiLlama data.

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