As discussed in a previous article on Crypto.IQ, Ethereum (ETH) transaction fees skyrocketed in late August, reaching as high as $15-$20. Further, that $15-$20 was the cost of a simple transaction, and the cost for deploying smart contracts, such as for tokens and Decentralized Finance (DeFi) projects, likely went well over $100. 

This made Ethereum prohibitively expensive, and there is no doubt that the transaction fee crisis caused users and developers to move to other blockchains, such as EOS and Tron (TRX). Essentially, Ethereum is not the only blockchain which is well-suited for crypto projects, and since Ethereum became prohibitively expensive, users likely fled Ethereum en masse in search of greener pastures. 

Indeed, Ethereum’s rally came to a crashing halt after peaking at $480, and Ethereum dropped to as low as $320. Although there are other fundamental factors behind the Ethereum crash, such as global economic headwinds, the transaction fee crisis undoubtedly played a role. 

Also, after a frenetic DeFi rally to nearly $10 billion total value locked, DeFi total value locked has now dropped to below $8 billion

Essentially, Ethereum’s lack of scalability and the resultant transaction fee crisis likely helped to stop the Ethereum and DeFi bull run. 

Zooming out however, one major winner in all of this was the miners. Due to the record transaction fees, Ethereum miners earned $114 million from transaction fees in August. This represents 40% of all miner revenue for August, which is another record. 

That being said, this positive effect for miners is over, since now that the Ethereum and DeFi rallies have halted, Ethereum transaction fees are back down to normal

Although the Ethereum transaction fee crisis was highly detrimental, and likely helped bring about the recent Ethereum and DeFi ‘crash’, there is a silver lining to every cloud, and miners made tons of money from the transaction fee crisis.