It has come to notice that the transactions on the Ethereum network have been rather strange for roughly a week now. The network basically got crippled owing to the problems of scalability and congestion resulting in more expensive transactions and rising gas prices.
On July 2nd, the transaction fee on Ethereum network reached 5862 Ether, taking users of the Ethereum blockchain by surprise. The last time there was a significant hike in the transaction fee was in January when it rose to 3696 Ether. The unusual rise in fee posed difficulties and prevented many users from completing their transactions.
With the hike in the transaction fee, there was also a sudden upsurge in the Gas prices. The Gas prices, which are normally settled at 5 Gwei, went up to 50 Gwei.
The doubt in the minds of Ethereum users finally got cleared when the MyCrypto wallet revealed in its tweet the reason behind the clog. The China-based exchange FCoin, in a bid to compete against Binance, somehow single-handedly managed to create a clog in the Ethereum network. According to MyCrypto, FCoin financially incentivized the creation of multiple pseudonyms to influence the network on a large scale.
0/ Why the Network is So Clogged: A Thread
(warning: strong language and anger-inducing behavior inside) 😠
— MyCrypto.com (@MyCrypto) July 3, 2018
In simpler words, FCoin wanted its users to transfer a minimum amount of the FCoin token to the exchange. But the vote wasn’t taken into account as per the token value. Instead, it was based on the number of cumulative deposits or the number of unique addresses that sent or transferred the tokens.
FCoin drew a lot of flak from MyCrypto. Shedding light on the matter, MyCrypto tweeted:
“Unsurprisingly, people who are financially incentivized to get a sh*t-token listed on a sh*t-exchange are sending these tokens en masse to separate accounts on the blockchain and then to separate accounts on the ‘exchange-who-must-not-be-named’ […] and thus resulting partially (or entirely?) in the network congestion & high transaction fees that we’ve experienced these past few days.”
The exchange termed this act as ‘Sybil attack’.
To tackle this roadblock, Binance came forward and decided to increase the Gas prices on Ethereum till the congestion stabilises. The fee, according to the sources, will come out of Binance’s pockets to ensure persistent level of service for the users.
#Binance has temporarily increased Gas price on withdrawals to 180 Gwei until the congestion on the $ETH network reduces.
Withdrawal fees will remain the same during this period. pic.twitter.com/LP4rwmIhxB
— Binance (@binance) July 2, 2018
Ethereum co-founder Vitalik Buterin on July 2nd announced that he had come up with a solution regarding scalability. The solution is yet to be accepted and implemented. Until then, the crypto community should watch out for such Sybil attacks.