Shark Tank’s Kevin O’Leary recently expressed concerns about Ethereum’s ( ETH) network congestion and fee surge over the past weekend. In a social media post, O’Leary claimed that the Ethereum blockchain network had become really congested, resulting in even relatively small transactions costing upwards of $1,000. He compared this issue to “paying a thousand-dollar toll to drive on a one-lane highway.”
O’Leary, who is often called “Mr Wonderful,” also mentioned that innovation and tech advancements are not simply about hype, but they should also be about building resilient and scalable infrastructure that can handle a significant increase in activity.
For the past 10 years, the industry has talked about going on-chain, and now with real-world adoption happening, the “cracks are showing,” he claimed.
Notably, Ethereum’s average daily gas price did actually surge to a 9-month high this past Friday, according to Etherscan data. This happened during a huge crypto market sell-off.
Gas price is the price per unit of computation that a user is willing to pay for a transfer made on Ethereum. During periods of very high traffic, it increases considerably as users try to get in front of the queue and have their transfers prioritized over others.
It’s worth noting that O’Leary is known for his belief in the potential of Bitcoin (BTC) and Ethereum. He stated this past month that these digital assets may potentially capture over 90% of the crypto market’s volatility and yield, and that one must not chase other random tokens.
He has also shared that the younger investors, particularly the GenZs, are investing in Bitcoin and Ethereum as well as more traditional stocks. He acknowledged not having similar opportunities earlier in his career.
Although ETH transaction fees were quite high this past weekend, it is certainly not a new development. Many years back, the popular CryptoKitties game had severely congested the Ethereum network as well. But now, there are many L2s and sidechains along with alternative blockchains that can perhaps lessen the negative impact of high fees. However, the root problem is still not addressed.
Perhaps the blockchain data structure itself may not be able to process a very large number of transactions, as the Ethereum protocol has been implemented. There may be faster chains like Solana and Tron, but they are not as decentralized and might not offer the same level of security. This is why Ethereum could still serve as the final settlement layer and not necessarily be used as a network to process very large amounts of transactions.
