The Ethereum (ETH) network is experiencing congestion, leading to an increase in network fees, called "gas fees." Miners operating the Ethereum network charge gas fees to handle transactions. Today, a single Ethereum network token transfer costs roughly $25. For apps operating on Ethereum, such as decentralized exchanges (DEXs), a single process can take multiple transactions. A trader swapping two assets on Uniswap can expect to pay at least $75 for a single swap.
The decentralized finance (DeFi) economy has seen massive growth over the last year, and the Ethereum network has been congested for weeks-long stretches over this period. Historically, the NFT economy is harmed by higher gas fees, because collectors and gamers are less willing to make small-value transactions. Stablecoins, like USD Coin (USDC) and Tether (USDT), operate on the Ethereum network. Just as with NFTs, consumers are less willing to do small transactions in a stablecoin when the gas fees are high.
This isn't the first time the Ethereum network has become badly congested. The Ethereum software team has been developing scalability fixes for years, but they're notorious for lagging behind network growth. These recurring problems have opened the door for competitors offering faster and cheaper transactions, with several gaining major traction: Cardano (ADA) ($91 billion market cap), Solana (SOL) ($43 billion market cap), and Polkadot (DOT) ($33 billion market cap).