Ethereum network gas fees have skyrocketed to their highest levels in eight months due to the growing interest in a new experimental token standard called ERC-404. On February 9, gas prices reached an average peak of 70 gwei ($60 for a standard transaction), with peak costs surging as high as 377 gwei, a level not seen since May 12, 2023.
The surge in gas prices can be attributed to the increasing hype surrounding the ERC-404 token standard in the crypto industry. This wave began on February 5 when the Pandora project launched the experimental standard. Since then, it has gained over 6,100% and accumulated over $474 million in volume.
ERC-404 aims to connect ERC-721 nonfungible tokens (NFTs) with ERC-20 tokens, allowing for fractionalized NFTs. This means that multiple wallets can own a portion of a single NFT and use it for trading or staking for loans.
Despite using the “ERC” prefix, the name ERC-404 is unofficial. The developer behind the Pandora project, known as “ctrl,” stated that the team is working on reducing gas costs significantly.
According to PopPunk, the co-founder of gas-auditing firm Gaslite, an ERC-404 token requires approximately three times the amount of gas compared to an average NFT transaction.
The surge in network usage on February 9 was primarily driven by increased activity on the decentralized exchange protocol Uniswap. This activity can be traced back to the substantial trading volumes generated by projects like Pandora and DeFrogs, which have a combined trading volume of over $600 million in the last week.
Overall, the Ethereum network is experiencing high gas fees due to the interest in the ERC-404 token standard and the increased trading volumes on Uniswap.