Yesterday, an all-time record occurred for the total number of transactions recorded in a day on Polygon’s blockchain and the associated fee cost.
According to PolygonScan data, nearly 16.5 million transactions were recorded in a single day, up from 6.2 million transactions on Wednesday, and 2.9 million on Tuesday.
The historical record of transactions and fees on Polygon
It should be noted that from April until the day before yesterday, 3 million daily transactions had never been exceeded, and 10 million had never previously been exceeded.
The previous all-time record was from 16 June 2021, at the height of bullrun, when just under 9.2 million were recorded.
It was a fluke, however, because 9 million daily transactions were never exceeded again since then.
Indeed, once the bullrun ended, in November 2021, the average number of daily transactions had fallen below 4 million, and by March 2022 this threshold had never been reached again.
So the day before yesterday was a new all-time high for the past two years, and yesterday was a new all-time high.
The fee increase on Polygon
At this point it is more than obvious that fees have skyrocketed.
It should not be forgotten that the cost of transaction fees is neither fixed nor calculated as a percentage of the amount of the transactions themselves.
Instead, it is for all intents and purposes a competition, where those who pay the most fees get their transactions confirmed before the others. So when the queue of transactions awaiting confirmation increases by a lot, the only way to speed up the confirmation process is to raise the fees.
And so if the cost of fees in recent days was 100 Gwei, yesterday it jumped to over 7,000 Gwei, or seventy times more.
Today, however, everything is back to normal, with the cost of fees for a transaction to be approved quickly dropping below 400 Gwei.
The highest costs were on token swaps on the blockchain, going up to $5 per swap. Today that cost has returned to less than $0.50.
Despite this, such costs have still always remained well below those on Ethereum’s main network, where they have instead reached as high as $30 or $50.
The cause of the increase
The cause of this sudden boom is the sudden increase in the minting of PRC-20 tokens, carried out on a large scale.
PRC-20 is a new token standard on Polygon inspired by Bitcoin’s Ordinals.
Specifically, in the past two days there has been a spike in the minting of PRC-20 tokens called POLS, which are tokens that are created using transactional call data on the Polygon blockchain, instead of the normal ERC-20 token standard.
Polygon’s PRC-20 tokens, however, are different than Bitcoin’s Ordinals, because they use transaction call data to generate unique tokens or image artifacts, similar to NFTs, and embedded in network transactions.
While the hourly peak of PRC-20 token generation on the Polygon network on Nov. 15 was about 517,000, yesterday it spiked to over 40.8 million.
Layer-2s and fees
The fact is that the main utility of layer-2s is precisely to reduce fees.
In fact, despite the spike, average fees on Polygon remained well below those on Ethereum (Polygon is a layer-2 of Ethereum).
So a sharp spike in fees on a layer-2 caused by mass minting of new tokens is not exactly a good thing for a layer-2.
Moreover, one should not forget that Polygon has two major rivals, Optimism and especially Arbitrum, which was recently joined by Coinbase’s layer-2 called Base.
However, for example, by analyzing the market prices of MATIC (Polygon), OP (Optimism) and ARB (Arbitrum), we find that in the last 24 hours MATIC has lost 6%, while ARB has lost almost 6.5%. OP, on the other hand, stopped at -3.3%.
Indeed, looking at the last seven days, Polygon is at +1.6% while Arbitrum is at -7.4%, with Optimism at +2.2%.
So the crypto markets have not reacted at all badly to the little problem on Polygon.