Coinbase Pro stops paying Ethereum transaction fees for its customers

Due to the rise in Ethereum’s (ETH) gas fees, the Coinbase Pro exchange is changing its policy and now passing network fees directly on to its customers.

Coinbase Pro changes policy with Ethereum

Through an announcement posted on Twitter, Coinbase Pro indicated that as of September 27, Ethereum’s network fees will have to be paid by users of the platform. Here is the announcement from the Coinbase Pro team via their Twitter page:

Starting today, Coinbase Pro will pass network charges directly on to our customers. These fees (sometimes called “gas fees” on the Eth blockchain) are paid directly to miners who process transactions and secure the network.

Starting today, Coinbase Pro will pass along network fees directly to our customers. These fees (sometimes referred to as “gas fees” on the Eth blockchain) are paid directly to crypto miners that process transactions and secure the respective network. https://t.co/hcuPoejwCz

— Coinbase Pro (@CoinbasePro) September 17, 2020

Previously, all transaction fees, especially when withdrawing Ether from the platform, were handled by Coinbase Pro. Unfortunately, all good things come to an end.

The team emphasizes:

In order to ensure a smooth experience for our customers and reasonable transaction processing times, Coinbase Pro will charge a fee based on our estimate of the network transaction fees that we expect to pay for each transaction.

Note, Coinbase Pro does not charge network fees for transfers of cryptocurrency from one Coinbase wallet to another or transfers between verified Coinbase accounts.

Record congestion in Ethereum

This unexpected change in policy is therefore undoubtedly attributable to the fact of the continued congestion of the Ethereum network, notably caused by the explosion of DeFi.

Yesterday, the Ethereum network also experienced colossal congestion, caused by thousands of users claiming their UNI, the new governance token of Uniswap.

This airdrop of 400 UNI caused a real crush on the platforms listing the token, causing the saturation of the Ethereum network. In particular, this triggered an increase in the price of gas for a transaction, which climbed to 700 Gwei.

Moreover, according to analysis firm Glassnode, the hourly income of Ethereum miners has reached a new all-time high, the total costs in 1 hour having exceeded one million dollars:

Ethereum 2.0 is overdue

Although this decision is justified, it angered users, who found this peculiarity to be one of Coinbase Pro’s only strengths.

Now that Coinbase has led the way, it is highly likely that other platforms will make a similar decision, increasing the fees they apply for any transaction involving an asset linked to Ethereum.

Binance CEO Changpeng Zhao said last week that he was ready to increase Ether withdrawal fees on the platform if the situation does not improve.

The deployment of Ethereum 2.0 is becoming more of a top priority than ever if the network wants to keep up. Right now, it’s hard to imagine that Ethereum on its own could bear the full burden of DeFi.

Its migration to Proof of Stake is expected to take a few more months, but some optimists believe it will be effective as early as November.

Until ETH 2.0 is truly operational, many protocols will certainly emerge on other networks capable of responding to demand, such as those of Polkadot (DOT) or Avalanche (AVAX).