Binance CEO Changpeng Zhao has recently revealed that cryptocurrency exchanges are continually racking up losses that could continue to rise as a result of exorbitant gas fees on the Ethereum network.
The CEO, whose exchange, like most others, is home to cryptocurrency transactions, including Ethereum, explained that Ethereum (ETH) transactions have left exchanges in an unfavorable state as losses continue to appear with each withdrawal. which currently attracts fees ranging from $ 10 to $ 20. With leading exchanges like Binance, where hundreds of withdrawals are processed on a daily basis, losses could exceed $ 1,000,000, should withdrawal requests surge.
Exchanges may increase fee charges to cover losses
In an attempt to fix this issue, the CEO advises that withdrawal fees could be changed, meaning that fees could be increased for platform users.
The high ETH network gas fees is causing problems for most exchanges, running with $ 10-20 loss on each withdrawal.
Will have to adjust our withdrawal fees sooner or later. 😂
– CZ Binance (@cz_binance) September 1, 2020
The problem of the few high charges has been a major problem on the Ethereum network and the recent Ether (ETH) rally that sent ETH to a new 2020 high of $ 486 did not make things any easier.
In fact, with the rise in the price of Ether and network activity, congestion will cause delays in processing transactions, which in turn will cause withdrawal fees to skyrocket. Keep in mind that Ethereum is not the only network facing the problem of increased transaction fees. Similarly, Bitcoin is also witnessing a significant increase in transaction fees which have risen to $ 3.53. In July, transactions on the Bitcoin network attracted charges below $ 1, but in the first week of August, the average transaction cost reached new highs of $ 6.47.
Ethereum miners are not affected
Meanwhile, miners on the network are currently enjoying a smooth revenue stream, thanks to increased transaction fees.
Yesterday, leading on-chain analytics company Glassnode revealed that Ethereum miners made more than $ 500,000 in an hour as prices jumped 10%. Despite speculation that block rewards could be significantly lowered, it appears that miners will accumulate more revenue in the meantime – that is, if the bullish rally is unchanged anytime soon.
Is Ethereum 2.0 the way to go?
Solutions for scalability have largely been linked to the Ethereum 2.0 release. However, based on recent comments from Vitalik Buterin, implying that the upgrade may take longer than expected, second layer options are proving to be the only and most suitable solutions available. In response to the CEO's tweets, the Ethereum co-founder urged the exchange to support deposits and withdrawals on OMG, zksync, and loopring, the three that offer better payments on an alternative network.