The amount of Ethereum gas (the resource used to execute transactions on the network) being used is currently at an all-time high according to the 14-day moving average. This milestone shows that the network is growing even in a sluggish market.
Despite the lackluster market movements for Ethereum in 2019, some network fundamentals are looking strong when taking a macro perspective. The amount of gas used on the network is currently sitting at an all-time high — a good indicator that activity remains high.
Developer Anthony Sassano (@sassal0x) recently posted a graph which shows that, based on the 14-day moving average, the gas consumption on the network is breaking records.
Ethereum total daily gas used (blue line) is currently at all time highs based on the 14 day moving average. pic.twitter.com/juL53Rm1Gy
— Anthony Sassano (@sassal0x) September 14, 2019
However, what caught some users’ attention on Twitter was the overlapping price chart on Sassano’s post. It seems that in 2017, gas usage was closely following the price. Since then, it has completely decoupled, which may indicate that Ethereum is fundamentally undervalued.
The correlation between price and gas was much closer than it is now, makes me feel like ETH is extremely undervalued.
— Peng_Fei (@u_Peng_Fei) September 14, 2019
That being said, the current issue for Ethereum is that these fees are far too high for decentralized finance just yet. Even at $0.05 or $0.10 fee per transaction, the network will eventually find itself bottlenecked until ETH 2.0 comes out. For now, gas usage is increasing — a positive sign, but one which may find its ceiling in the current proof-of-work consensus model.
Ultimately, the increasing gas consumption underscores how ETH 2.0 can’t come sooner. The demand for transacting on the network remains high, and if Ethereum can keep up this momentum, it will prove to be the perfect segue towards the ambitious proof-of-stake system of the future.
We can likely expect gas usage to continue to expand through 2020, but dApp projects might find themselves waiting for ETH 2.0 to better scale. In short, there is much to look forward to and the fundamentals are looking strong in the meantime.
Do you agree that increasing gas consumption is a positive indicator of Ethereum’s network health? Let us know your thoughts in the comments below.
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Images courtesy of Twitter.