Network congestion from Tether trading is grinding the Ethereum network to a halt with an estimated 100,000 transactions stuck in limbo.
The Ethereum network is experiencing intense network congestion, creating long wait times for users attempting to conduct transactions.
Tether trading volume (now at $18 billion) appears to be responsible, as it now constitutes at least half of the network’s capacity.
Moreover, the number of Tether token contracts have more than tripled in the past month (from 50K to 150K).
According to Etherscan.io, Ether’s network utilization has moved past the 90% level.
Consequently, it’s not surprising to note that more than 100,000 on-chain transactions were stuck recently, taking hours – in some cases days – to complete.
Redditor ‘OogieFrenchieBoogie’ complained that several of his transactions were still pending after 10 hours.
I’ve 3 pending transactions, pending for more than 10 hours, I’ve selected the “slow” mode on metamask, but 10 hours is really slow, right?
Transaction fees are likely to rise substantially as a result, potentially making Ethereum less attractive to corporate users.
While the reason for this increase remains far from clear, the continuing popularity of ERC20 tokens may be playing a role.
For instance, Binance began limited USDT deposits to (ethereum-based) ERC20 tokens in July.
As a result, loyal Binance users began trading in their Omni (bitcoin-layer) Tether for ERC20 Tether, eventually putting a strain on the ethereum network.
At present, more than 40% of all Tether is transacted on the ethereum network.
In late 2017, ERC20 gaming tokens severely congested the ethereum network as well. Then, users of the CryptoKitties gaming app constituted 20% of network traffic.
As it was impossible to increase network capacity at the time, CryptoKitties was compelled to raise transaction fees.
Raising The Blocksize Limit
Thus, as with bitcoin earlier, cries that ethereum must increase its blocksize are mounting.
Although the ethereum blocksize is a mere 20,000 bytes, it retains a soft limit dependent upon whether a simple or token transaction is conducted.
For instance, sending ETH from one place to another (a simple transaction) is far less costly than conducting a smart contract transaction (a token transaction).
And being a token, a tether transaction requires more gas than a simple transaction.
Currently, ethereum is handling roughly half as many transactions as it did when it was last congested (January 2018). Even as the gas limit has remains the same.
However, as half of these transactions are token transactions, they require much more gas.
Fortunately, miners have it within their control to increase the gas limit (by majority vote) for any given block
Otherwise, raising the block size limit in order to increase network capacity will become a rallying cry.
Those reluctant to see the blocksize increase point to greater network efficiencies as an alternative solution.
This includes quickly getting rid of orphaned blocks, a proposal that has been implemented with some success.
In addition, the upcoming Istanbul hard fork will impactdata storage, the mining protocol, and code execution.
However, it’s unclear to what extent this will relieve the current network congestion.
Images courtesy of Etherscan.io, Pixabay