Loopring Surges 40%, Solana Replaces Cardano as 5th-Largest Coin as Ethereum Fees Spike

The average transaction fee on Ethereum has risen a staggering 2,300% since late June.

AccessTimeIconNov 3, 2021 at 3:55 p.m. UTC
Updated May 11, 2023 at 5:27 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

Rising costs on Ethereum, the world’s largest smart-contract blockchain, appear to be driving investors to coins associated with layer 2 products facilitating faster and cheaper transactions and rival programmable blockchains.

The average fee on Ethereum, known as gas, has risen by a staggering 2,300% since late June. It has more than doubled to $56 in the past two weeks alone, according to data provided by the blockchain analytics firm Glassnode, and the seven-day moving average of the mean transaction fee has hit a record high of $52.

Surging costs are drawing the ire of the investor community and forcing the retail crowd to search for relatively cheaper options like layer 2 protocol Loopring and rivals Solana and polkadot.

“Ethereum is a beast (ETH bull here) which is the future of cryptocurrency – but the gas fees really can affect us,” a Redditor complained in a blog post published Tuesday, explaining the rationale behind purchasing Loopring. “We are tired of paying $150+ in gas fees just to transfer or buy $100 worth of a cryptocurrency.”

CoinDesk data show LRC, the native token of Loopring, a layer 2 scaling protocol for Ethereum-based decentralized exchanges (DEXs), has increased 243% from $0.42 to $1.44 in the past seven days, with the price surging by nearly 40% over 24 hours. Rumors that video game store GameStop may team up with Loopring for a non-fungible token (NFT) marketplace could be adding fuel to LRC’s price rally.

Programmable blockchain Solana’s SOL token has risen by 13% in the past 24 hours to a record high of $234. The cryptocurrency has gained 25% in the past seven days, pushing Solana’s market capitalization to $70 billion – the fifth-largest globally and ahead of another Ethereum rival Cardano’s $67 billion, CoinGecko data show.

According to Messari’s Mason Nystrom, Solana is also expanding its footprint into Ethereum-dominant crypto market sub-sectors like NFTs.

Solana vs. Ethereum NFT stats
Solana vs. Ethereum NFT stats

“As the Solana ecosystem continues to expand, NFTs on Solana have similarly witnessed formidable growth as a category,” Nystrom said in a blog post published Wednesday. “Total NFT secondary sales volume on Solana has officially reached $500 million.”

Smart-contract blockchain Polkadot’s DOT token also rallied to an all-time high, touching $53.37 early today and surpassing the previous peak of $49.74 reached in May.

Most coins linked to smart-contract blockchains have outperformed ether in the past 24 hours. Ether was trading near $4,600 at press time, representing a 3.5% gain.

Performance of ether and its rivals in the past 24 hours. (Messari)
Performance of ether and its rivals in the past 24 hours. (Messari)

According to Delphi Digital, a continued rise in Ethereum’s transaction fees would crowd out retail investors, leading to a drop in network usage and the cryptocurrency’s price.

“It is critical that Ethereum scaling solutions like StarkNet, zkSync, Arbitrum and Optimism gain traction soon, otherwise steep transaction costs will increase activity on alternate L1s such as Solana, Avalanche, Fantom and Polygon (to name a few),” analysts at Delphi Digital said in the market updated published Tuesday.


Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.



Read more about