Ethereum gas prices surge as the traders are looking for stablecoin exits and the prices are looking to quadruple over the past two days because of the stablecoin transactions so let’s read more today in our latest Ethereum news today.
The Ethereum gas prices surge and they could double once again today, as per the data from Etherscan. Most of the causes for the increase are the transfers involving the addresses of the centralized stablecoins, USDC and Tether. The Tether stable coin transactions accumulated the most fees in the past day and are besting the trades on Uniswap as well as 1Inch where the stablecoin ranks fourth.
People confusing $USDT and $UST and panicking.
People don’t understand the difference between an under collaterized algorithmic stablecoin and a backed stablecoin.
Panic dumping $USDT for $USDC and plain old $USD.
Peak fud time.
Warning: this post will attract “Tether truthers”
— WhalePanda (@WhalePanda) May 12, 2022
This is quite notable because, for most of last year, the NFT marketplace OpenSea ranked as one of the top two ETH gas guzzlers. Gas is measured in gwei and quantifies the computational power required to make the transaction on the ETH network. While the drop inv value of ETH is now under $2000 for the first time since July 2021, It brings transaction fees down in dollar terms and the amount of activity on the network is causing the price of gas in USD to travel upwards. The estimated cost of a Tether transfer was more than $20.
A shy of 22 billion in USDT was moved on ETH a day ago and the highest amount since May 2021 but it is not mainly because people want Tether. As per the CoinMarketCAp data, the USDT market cap fell over 2% in the past day which means the circulation dropped as well. USD could be painted with the same brush as Terra’s decentralized UST stablecoin and this week, UST lost its peg in a major way and dropped to as low as $0.29. The depegging caused the price of Terra’s native token to collapse from a high of $99 to $0.01.
Tether lost its dollar peg before regaining the target price as the stablecoins faced a huge crisis. Some including Tether’s CEO are suggesting that traders are selling USDT because they mistake it for UST. Unlike UST, it backstopped via undercollateralized holdings of LUNA, UST, AVAX, and BTC, USDT keeps the reserves in cash, bonds, and other assets so many think its treasury is too reliant on commercial debt which can become illiquid in a financial crisis. Today was a chance for a company to boost the stabelcoin’s stability and published a blog post claiming it processed 300 million redemptions of USDT and will process another 2 billion before the day ends.
USDC in the meantime publicized the move towards a reserve comprising cash and short-term Treasuries and benefited from the panic. The marekt cap is 0.75% as traders exit open positions on eTH exchanges and trade into USDC.
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