Miners of Ethereum have increased mining capacity of the platform. In Ethereum, a cryptocurrency gas is used to pay transaction fees, and the gas limit decides the number of transactions that can be included in a block.
In Ethereum, each miner is allowed to raise the gas limit by 1/1024 of its current value and the aggregate of all the miner’s actions will either raise the gas limit or cause a dip in it.
The miners today continued raising the gas limit till it crossed 10 million transactions per block. That constituted a rise of 25% over last week. That should ideally be good news as more number of transactions per block would mean faster transactions and cheaper transaction fees.
The worries are two-fold. One is about the nature of transactions, and other is about the changes that will have to be made to accommodate this rapid rise in the number of transactions.
The major contributors to the increase in transactions have been identified as cryptocurrency Tether and a gambling game called Fair Win.
Tether was earlier base on Bitcoin but since July swapped almost all its token to Ethereum. Tether which is traded as USDT now accounts for 25% of all transactions on Ethereum. Tether is considered a stablecoin as it has pegged its value to $1. After China banned fiat on-ramp for cryptocurrency exchanges, Chinese investors are using Tether to move their currency portfolio outside of the dollar, to offshore accounts. Thus, Tether is facilitating the grey market in China.
The Company issuing Tether admitted that dollars do not fully back it. Thus, it is a stablecoin just in name. Also, its sister firm Bitfinex is under investigation for allegedly misusing USDT.
Thus, even as it is growing, Tether is increasingly being viewed with suspicion.
Fair Win’s accrued transaction fees of $1.17M, show it is also responsible for a spike in transactions.
This increase in transactions means that blockchain would get bigger faster and miners would need more expensive storage equipment. There are fears that if the sufficient number of miners shift to other platforms rather than buy extensive storage equipment, it could lead to centralization of Ethereum.