{"id":254243,"date":"2021-05-20T08:57:53","date_gmt":"2021-05-20T05:57:53","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/fallout-ethereum-fees-skyrocketed-as-traders-raced-to-unwind-leveraged-positions\/"},"modified":"2021-05-20T08:57:53","modified_gmt":"2021-05-20T05:57:53","slug":"fallout-ethereum-fees-skyrocketed-as-traders-raced-to-unwind-leveraged-positions","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/fallout-ethereum-fees-skyrocketed-as-traders-raced-to-unwind-leveraged-positions\/","title":{"rendered":"#Fallout: Ethereum fees skyrocketed as traders raced to unwind leveraged positions"},"content":{"rendered":"

“#Fallout: Ethereum fees skyrocketed as traders raced to unwind leveraged positions<\/strong>”<\/p>\n

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                Traders racing to exit leveraged positions on-chain app<\/a>eared to drive a record spike in Ethereum gas prices yesterday, with users reporting transaction fees of more than $1,000 still got stuck.\n                <p>Ethereum fees surged to record highs amid the recent crypto downturn, with users paying more than 2,000 gwei to execute transactions at its peak.\n<\/code><\/pre>\n
Digital asset research firm, Delphi Digital, noted<\/a> gas prices oscillated between 1,500 and 1,700 gwei for approximately one hour as DeFi liquidations drove \u201cgas wars amongst liquidators and arbitrageurs.\u201d<\/p>\n
Ethereum gas prices amid crypto market crash: Dune Analytics<\/figcaption><\/figure>\n
In the May 19 Daily Gwei<\/em> newsletter<\/a>, Ethereum developer Anthony Sassano speculated the fee frenzy was likely triggered by on-chain margin traders racing to exit their leveraged positions:<\/p>\n
\u201cThe price was falling so fast that people were getting scared for their on-chain leveraged positions and were willing to pay anything to get their transaction included in the next Ethereum block (presumably to close their positions).\u201d<\/p><\/blockquote>\n
Chris Weston of Melbourne-based brokerage Pepperstone also emphasized the role of leverage in the crash, estimating<\/a> that cascading margin calls drove $9.13 billion worth of liquidations across crypto exchanges in 24 hours.<\/p>\n
Alameda Research\u2019s Sam Trabucco also noted high leverage in the Ethereum markets, criticizing the narrative that Ethereum\u2019s rally was largely fueled by institutional spot buying.<\/p>\n
\u201cI saw a TON of speculation that the rallies (especially the ETH rallies) were low-leverage and spot-driven, and therefore more organic\u2019 somehow […] This narrative was super wrong,\u201d said Trabucco.<\/p>\n
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That people thought ETH in particular was just all institutions buying on Coinbase or something was particularly baffling to me. Look at these GIANT OIs\/premia as ETH skyrocketed to its ATH! This was all on leverage, just waiting for a day like today to come along … pic.twitter.com\/v4tpVd7teU<\/a><\/p>\n
— Sam Trabucco (@AlamedaTrabucco) May 20, 2021<\/a><\/p><\/blockquote>\n
Crypto luminaries were not exempt from the gas crisis, with CoinShares CSO, Meltem Demirors, tweeting about her stuck transactions in spite of paying more than $1,000<\/a> in gas fees.\u00a0<\/p>\n
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the market punching me in the face, and reminding me, once again, that blockchain compute is a finite resource<\/p>\n
 pic.twitter.com\/OZIAwg0Ljo<\/a><\/p>\n
— Meltem Demir\u25cers (@Melt_Dem) May 19, 2021<\/a><\/p><\/blockquote>\n
However, some analytics were able to find a silver lining amid the skyrocketing fees, with Paradigm\u2019s Hasu estimating<\/a> that Ethereum stakers would have captured \u201ctens to hundreds of millions of dollars\u201d in fee revenue if EIP-1559 and Proof-of-Stake had been live during the crash.<\/p>\n