Does Ethereum High Gas Fee Really Stop Users from Using its DeFi and Dex?

2021-01-19 08:50:00 · 3459 views · 4 min read


Ethereum gas price has reached its third-highest average of $10.20 per transaction since 2020. Transaction costs have ballooned once more. 



One NFT project gets upset with this. Due to the insane fee and high activities on the Ethereum blockchain, Aavegotchi ($GHST) pushed back the mainnet launch of its non-fungible token digital collectible game. The game features digital collectible ghosts backed by Aave Protocol ($AAVE) interest-bearing aTokens.



How does the high gas fee in Ethereum network affect its DeFi and Dex ecosystem? Does the high gas fee really stop users from using Ethereum Dex and DeFi?


  • The Ethereum DeFi and Dex volume continues to grow even though the gas fee is climbing up. This is mainly because of the price bull of $ETH and ERC20 tokens.


  • Users are running away. The daily active users in Ethereum DeFi and Dex are decreasing.


  • DeFi and Dex are more for whales. The daily transaction amount is declining while the volume per transaction is increasing. It means the high gas fee is stopping retail investors but not whales.



Let’s look at the volume first. Despite the high gas fee, the overall volume of Ethereum DeFi and DEX has been increasing since Jan 1st, 2021. The 30d volume till Jan 18th has increased by 113.97%.

However, does this mean that the high gas fee does not stop users’ enthusiasm on Ethereum DeFi and DEX users? Not really. Let’s look at active users and transactions in Ethereum DeFi and Dex.

The market data demonstrates that both users and transactions are decreasing at the beginning of January. The total users of Ethereum DeFi and DEX dropped from 50.86K on Jan 1st to below 50K since. The transactions decreased by about 40K, from 172.07K on Jan 1st to 139.04K on Jan 4th, then fluctuated till now.



If we compare $ETH price movement and its DeFi and Dex users and transactions, we can clearly see that when the $ETH price increases, users and transactions are decreasing.

$ETH price starts to climb up since 1st Jan from $728 to $1.32K, at the same time, however, the daily DeFi and Dex active users and transactions starts to decrease. This opposite trend may reflect that users are really running away from Ethereum DeFi and Dex due to the high gas fee which is driven up by the increasing $ETH price. 



So we can conclude that the Ethereum DeFi and DEX volume growth is mainly due to the price bull of $ETH and ERC20 tokens. But the high gas fee has influenced the Ethereum DeFi and DEX to some extent, which is reflected by the decrease of active users and transactions.



Let’s see how the high gas fee influences DeFi and DEX dapp performance by comparing the top dapp performance in each category.


  • DeFi

Ethereum DeFi’s volume has increased a lot at the beginning of January 2021, mainly due to the powerful growth of Compound’s volume which accounts for 47.1% of the total. However, the transactions have decreased significantly, from 60K on 31st Dec 2020 to around just 40K on 18th Jan 2021. Exactly the same situation as we’ve analyzed above.



  • DEX

When it comes to DEX, the volume increase is much sharper than DeFi, driven by the crypto market bull and the high profits. However, DEX transactions decreased to some extent.



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