By James Davis
The increased demand for the PEPE memecoin has caused gas fees on the Ethereum blockchain to surge above an 11-month high. As of this writing, completing a single transaction costs about $15.74, the highest since April 2022.
PEPE has gained the attention of traders since its inception last month. In the past 24 hours, the memecoin has posted about $151 million in trading volume on decentralized exchange Uniswap. This figure is higher than USDT and wrapped Bitcoin volumes.
PEPE became one of the top 100 cryptocurrencies by market cap on Monday after its valuation crossed the $500 million mark. On Friday, it was ranked 46th, with a market cap of $1.16 billion.
The PEPE’s success has given rise to several copycats representing various internet memes. Crypto analytics company Nansen reports that the smart contracts for memecoins like TURBO, TRBNR, SPONGE, and BOB are the most active on the Ethereum blockchain.
Following the gas fee increase, about 9.4 ETH has been burned in the past 24 hours. Ethereum implemented a mechanism for burning transaction fees in 2021 to reduce ETH’s supply growth. Therefore, increased activity on the blockchain means more ETH will be destroyed.
Layer-2 Networks Experience Gas Fee Spike
Ethereum scaling solutions, popularly known as layer-2 networks, have also seen a rise in transaction fees over the last few days.
There are two types of scaling solutions: Optimistic and zero-knowledge (ZK) proofs. They use the rollups technology to combine multiple transactions and then process them as a single transaction before sending them back to Ethereum.
Notably, fees on ZK-based layer-2 networks such as Starknet, zkSync Era, and Polygon zKEVM have recorded higher gas fees than Optimistic-based layer-2s. Swapping tokens on these protocols now costs users between $3 and $9. This has led to users expressing disappointment on various social media platforms, questioning whether the ZK-based layer-2s can really reduce gas fees as they claim.
Meanwhile, it costs around $0.4 to swap tokens on Optimistic scaling solutions like Arbitrum One.
PEPE Price Analysis
Since its launch on April 18, PEPE, a memecoin based on an internet meme called Pepe the Frog, has been on an uptrend. It started trading at $0.000000074 before rallying to its current price of $0.00000276. PEPE is up 806% over the last fourteen days and has increased by 75% in the past 24 hours.
One investor took to Twitter on Friday morning to claim they turned $300 into $1.03 million. But these gains could mean nothing if PEPE also faces liquidity problems, as most memecoins do. So what’s liquidity? Simply put, liquidity is the measure of how quickly a token holder is able to convert their holding into cash.