Are cracks emerging in Ethereum’s mettle? Slow transaction times caused by a backlog have caused several exchanges to put a hold on ETH transactions. The holds have surprised many, given the Ethereum network’s past ability to host high transaction volume.
Bitfinex tweeted it was suspending all ETH withdrawals “as the Ethereum network continues to experience extreme delays” until the network backlog subsides and they can reliably post transactions to the blockchain.
CEX.IO tweeted the same thing, as did BTC-E, which cited the “unstoppable operation of the Ethereum network due to the network load.”
An update on June 20 from ShapeShift’s support site advised users not to submit a ticket if they have not received ETH or an ETH token, but to wait 24 hours. “The entire ETH network is backlogged and causing delays, however, most transactions are posting to the chain within 8-10 hours,” the site noted.
Etherscan showed the average Ethereum block size at 8,956 bytes on June 13, more than quadrupling the amount a few months earlier. While the block size reached 12,725 on Oct. 10, that was a one-time event. The block size immediately dropped to the 2,000 range until March when it began steadily rising.
On June 20, the network recorded 300,000 transactions, according to data from Etherscan.
Startups based on the Ethereum network have been hosting ICOs which have been pressuring the network this week.
The Status ICO clogged up the network yesterday with “a huge number of high gas fee transactions, most of which are failing but still filling up the blocks and preventing normal tx’s from getting in,” according to a subreddit post.
One subreddit post said a mining pool, f2pool, was manipulating transactions intended for the Status ICO.
SONM, a blockchain powered fog supercomputer, is another Ethereum based startup hosting an ICO this week, as well as Gilgam, a platform for decentralized eSports tournament management.
Even with the Status ICO finished, a large number of transactions have continued to clog the network, making it necessary to pay high fees for transactions. In the meantime, users will not be able to withdraw from wallets and exchanges.
A subreddit post noted that users with bad defaults on client software prevent the network from automatically adapting to larger gas volumes.
The backlog appears to have taken the wind out of Ethereum’s price surge, driven by its smart contract and decentralized application functions. Ethereum’s price had been on a roll, breaking the $400 mark this month.
ETH fell to a low of $13 on Wednesday evening on GDAX, losing some 25x in value before making up those losses.
Also read: Status ICO clogs up Ethereum blockchain?
Coders are undoubtedly addressing Ethereum’s transaction capability. Its ability to handle high transaction volume has not, however, been the main reason for its popularity.
Ethereum’s smart contracts have attracted significant interest among financial institutions and other companies.
The Enterprise Ethereum Alliance (EEA) formed to connect large enterprises to blockchain technology. The alliance includes Intel, JPMorgan, Microsoft, Toyota, Samsung, the Depository Trust & Clearing Corporation (DTCC), the San Francisco Stock Exchange and others.
Ethereum has also attracted significant investor interest, based on the variety of currencies used to purchase Ethers. More than 83% of Ether buying was purchased using bitcoin a year ago, according to CryptoCompare. As of last week, bitcoin only accounted for 32% of the buying. Fiat currencies like the U.S. dollar and the Korean won have contributed a growing portion.
Ethereum’s transaction volumes reached 50% of bitcoin’s in late May for the first time, suggesting Ethereum is being widely used.
Google searches for Ethereum reached an all-time high in early May.
Featured image from Shutterstock.
Last modified: July 13, 2020 3:12 AM UTC