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Ironically, Ethereum gas fees being high is exactly what keeps your ETH bag valuable, and in multiple ways

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by COINS NEWS 52 Views

There have been quite a lot of complaining bout how high Ethereum fees are. It is not that it is a non-issue, but for ETH holders high fees are exactly what keeps your bags valuable. . This means that as ridiculously high as fees can go, it comes right back around to benefiting holders through the burn mechanism.

First of all, high fees means that more users will need to buy gas for fees. This leads to a higher demand for ETH that tends to drives ETH prices up. So through basic market forces, high fees can increase ETH's value. This is the simple way. But there's another probably more important way: through the fee algorithm itself.

You first have to understand how fees works since EIP 1559 in the London Upgrade. Fees are now comprised of a dynamic base fee, that can increase or decrease in value from 0% to 12.5% per block, or around 5 times per minute. This means that during high demand fee can absolutely skyrocket. But for ETH holders, it's a very good thing. The entirity of the base fee is burned. This means that as ridiculously high as fees can go, it comes right back around to benefiting holders through the burn mechanism. Assuming you're not sending loads of transactions at peak times, in the long run high fees come right back and benefit holders.

submitted by /u/OneThatNoseOne
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