A significant jump in Ethereum network transaction costs on Thursday pushed leading decentralized exchange dYdX to adjust its policies temporarily.
In order to make a payment or process a computation on Ethereum, users must pay what is known as a gas fee, denominated in Gwei (one ETH equals one billion Gwei). According to available market data source Etherscan and ETH Gas Station, rough averages for gas prices paid rose from around 12 Gwei on March 11 to more than 100 Gwei.
At the time of writing, ETH Gas Station recommends 175 Gwei for "fast" transactions" and 151 as a "standard" gas fee. Etherscan proposes a range from 150 Gwei to 360 Gwei.
dYdX founder Antonio Juliano told members of the DEX's Telegram channel this morning that only trades equal to or larger than 10 ETH (or 2,000 DAI) will be placed on the exchange (although users can still close their positions of any size).
"We are doing this as an emergency measure to combat high gas costs, and don't expect it to last for very long," Juliano wrote.
As The Block's research analyst Matteo Leibowitz noted, traders on dYdX have leveraged positions and therefore are more likely to be liquidated in a volatile market.
"People are frantically trying to close their positions on dYdX. but Ethereum is congested right now (because so many people are trying to close their positions) so closing is difficult and expensive," said Leibowitz.
According to data from Dune Analytics, dYdX has taken between 34% and more than 50% of the DEX market share since the beginning of March. The exchange is the seventh-largest service listed on DeFi Pulse, and the fifth-largest among lenders.
Hit the gas
On dYdX, orders are matched off-chain and posted on-chain by the platform. This means that dYdX is also responsible for all the gas costs that these orders incur.
In February alone, the exchange paid over $40,000 in gas fees and it just launched a trading fee mechanism yesterday to off-set that cost. According to ETH Gas Station, dYdX has paid $186,000 worth of ETH in gas prices in the past 30 days.
Amid the transaction cost spike, dYdX has struggled to "round up enough ETH to continue to pay for fill transaction gas costs," according to Juliano. However, the firm is experiencing an issue with a centralized exchange as it tries to withdraw more funds.
The total number of pending transactions on Ethereum also surged to an all-time high of 123,931 on Thursday, according to Etherscan.
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