Ethereum’s average transaction fees just rocketed overnight after one user spent millions of dollars in fees to send a tiny amount of ETH.
After news spread regarding this mysterious transaction, community members began speculating as to what could be the reason behind this massive fee payment.
Some speculated that it could be money laundering or a simple mistake, but it does appear that there is one more likely explanation for this multi-million fee payment.
One user is noting that there may be a bug in the software that is controlling the distribution of funds in the source wallet.
The source wallet appears to be an exchange wallet, as data from Etherscan shows that it is processing outgoing transactions every several minutes.
Ethereum’s average transaction cost rockets amidst anomalous fee payment
At 9:47 AM UTC, a 0.55 ETH transaction was sent with a fee totaling at 10,668.73 ETH.
This transaction – valued at a mere $133.86 – cost nearly $2.6 million to send.
Instantly, Ethereum’s hourly fee count rocketed to all-time highs as a result of this strange transaction.
Analytics platform Glassnode spoke about this in a recent tweet, explaining that this surge marked the largest seen in ETH’s history.
“Ethereum fees shot up to $2,631,127 within a single hour. Historically, this is by far the highest value we’ve seen. This increase was due to a single Tx that spent 2.5 million USD in fees to transfer 0.55 ETH.”
While looking at the Etherscan for the transaction (which can be found here) it appears that the wallet sending the 0.55 ETH is owned by an exchange due to the frequency of outgoing transactions.
Here’s one reasonable theory for why this may have occurred
Some commentators speculated that this could be a money laundering technique, but a more probable theory is that it is simply a bug in the software of the entity that is facilitating these Ethereum transactions.
One user under the name of “FollowTheChain” spoke about this possibility, explaining that an exchange is now likely running a fractional reserve.
“My take: Not a fat finger. Not money laundering. Txs (withdrawals?) are automated, and they just kept going like nothing happened. This is a bug in the software that controls those funds. Most likely some entity (an exchange?) is now running a fractional reserve.”
Of course, it does remain a possibility that this was money laundering – done by the nefarious actors sending the local Ethereum transaction to their own node and then putting it into each block that they are mining.
This would not be effective, however, as one could track the address to which the fees were sent to.
If this begins happening on a frequent basis, then it may be a sign that it was not a software glitch or a mistake, but rather an intentional ploy.