When cryptocurrency technology first emerged with Bitcoin, it had a purely “peer-to-peer” concept. Users could trade their assets with negligible transaction fees without any middleman. However, today, most of the crypto user traffic is provided by centralized exchanges. When it comes to Ethereum, transaction fees can sometimes be daunting. So much so that finally, Uniswap's Gas fees have exceeded the Gas fees of Ethereum, which it is connected to.
According to data from CryptoFees, which tracks Blockchain Gas fees, the average daily fee earned from daily transactions on UniSwap between June 15 and June 21 is $4.87 million. In terms of daily fees paid on a seven-day moving average, Uniswap has outpaced Ethereum with $4.58 million in average daily fees.
One of the most likely reasons for this is the risks of centralized exchanges in volatile cryptocurrency markets. While interest in DeFi has increased recently, transactions on decentralized exchanges have also increased. Even in the current bearish market, there is significant investor interest in various DeFi projects. Uniswap, on the other hand, has become one of the many platforms that have experienced increases in fees and token prices.
We can define a decentralized exchange (DEX) as a peer-to-peer marketplace where users can exchange unattended, without the need for an intermediary to facilitate the transfer and custody of funds. DEXs handle brokerage transactions (traditionally banks, brokers, payment processors or other institutions) with Blockchain-based smart contracts that facilitate the exchange of assets. Thus, since the asset is only transferred between addresses, the security is increased to a very high level.
What is Ethereum Gas?
Gas is a unit of measure used to calculate the costs required to execute transactions on the Ethereum blockchain. Before users can transmit transactions on the Ethereum blockchain to the network, they must pay a transaction fee called Gas Fee. The Ethereum blockchain works with the Proof of Work algorithm. In proof of work, gas costs are incurred on the system when users perform their transactions on the blockchain. Users need to pay gas fees to process and register their transactions on the Ethereum network in smart contracts.