Gas fees on the Ethereum blockchain have historically been a major problem for decentralized gaming platforms. For the past year, the cost of transacting on the Ethereum blockchain has been extremely high. Such fees exacerbate when the Ethereum network becomes congested, which frequently occurred during the DeFi hype of the past year.
However, recent tech solutions have helped alleviate the cost of transacting and have paved the way for greater adoption in decentralized gaming. In the latest version of The Punters Pick, we highlight how the cost of transacting on the Ethereum blockchain is affecting the gaming industry. We also analyze what the recent drop in fees means for gamers and the solutions that some platforms are implementing to alleviate the costs that their users incur. Before providing the update on Ethereum fees and applicable technology solutions, we present our weekly CryptoPunt development roundup.
CryptoPunt Development Roundup 1 — CoinFlip and Jackpot make significant progress
Last week, we noted that development would accelerate on the CoinFlip game. We are happy to report that we have fully completed the logic for the game and that we have begun integrating the logic with the frontend interface. The Jackpot game has proceeded to full testing and we have also integrated a chat module for the wider CryptoPunt platform.
CryptoPunt Development Roundup 2 — Integrating oracles with blockchain cloud infrastructure
Over the following, the development team will focus on other technical components of the CryptoPunt platform. We aim to finalize the oracle for the Jackpot game. Chainlink is the industry leading oracle solution for Ethereum Dapps and we will deploy this oracle solution on the Kaleido blockchain cloud infrastructure which will enable both fast and reliable data inputs into the CryptoPunt games. We will also consider how to integrate the CryptoPunt game on the Polygon MATIC testnet.
Ethereum fees reach roughly $70 in latest cycle
Ethereum Average Daily Transaction Fee (Source: ycharts.com)
Over the past year, Ethereum gas fees have been on a roller coaster, with the average daily transaction fee reaching roughly $70 earlier this year. An explosion in the number of decentralized applications operating on the Ethereum network significantly raised the costs associated with transacting.
DeFi and NFTs contributed considerably to this growth. Users intensely competed to have their transactions included, with DeFi and NFT market participants often outbidding gamers. A DeFi participant seeking to add collateral will almost always be willing to pay higher fees than a recreational gamer who is looking to experiment with blockchain-based apps.
With market conditions recently turning bearish, the demand for Ethereum block space has also dropped as a result. This has alleviated the costs faced by Ethereum users but it is not a long-term solution.
The three Ethereum gas fee cycles
The spikes in gas fees on Ethereum has been a cyclical event, occurring after an influx of users and a pike in activity caused an increase in the number of transactions. There have been three major fee spikes since Ethereum launched in 2016. The first spike occurred during the 2017 ICO boom when new Dapps were coordinating fundraising events on a daily basis.
After the ICO boom of 2017, another surge in the number of users was experienced in the summer of 2018. This surge in usage was driven by the airdrops taking place on Chinese crypto exchange FCoin and suspected EOS-led bots coordinating spam attacks on the Ethereum network. The third spike is associated with the most recent DeFi and NFT explosion of 2020/2021.
In each of these cycles, gas fees dropped whenever the hype subsided. However, during the latest cycle, Dapps began turning to infrastructure projects as more of a long-term solution to the high fees.
Gaming platforms turn to infrastructure solution Polygon
Many platforms have turned to Polygon (MATIC) to alleviate the fees incurred by their users. Polygon is an Ethereum infrastructure solution that allows projects to access greater throughput and lower fees by connecting to their network.
Several gaming platforms, including CryptoPunt, have integrated Polygon (MATIC). By doing so, they’re allowing their users to game in a low-fee environment where their experience will be insulated from the cyclical jumps in fees.
Integrating Polygon is an extremely attractive solution for Ethereum projects, especially while Ethereum still faces scalability issues. The potential reduction in fees is dramatic. As it stands, the cost for transacting ETH on the Ethereum base layer is roughly $3.21 whereas this declines to $0.0000371 for those using the Polygon infrastructure.
CryptoPunt is a next-generation gaming and gambling Dapp. Underpinned by the Ethereum blockchain, CryptoPunt is positioning itself to be the leading blockchain-based gaming application. Users can start gaming in less than one minute with no KYC or registration process. CryptoPunt will offer a broad suite of games, including an option that has a virtual world and in-game economy.