Elon Musk Zeroes In On Dogecoin As High ETH Fees On DEXs Scare Retail Traders Away

There was an aha moment for the DOGE army on Thursday after Elon Musk sent out a tweet vouching for the coin in response to an article by a leading media outlet that small retail investors were getting choked by the high DEX fees on Ethereum.

DEXs Mainly Accessible To Whales And Big Traders

According to the report by Coindesk, despite decentralized finance (DeFi) coming into existence to democratize finance, making it accessible to everyone, most decentralized exchanges (DEXs) continue to remain only accessible to users with deep pockets.

According to data from Paris-based digital assets data provider Kaiko, whereas DEX volumes have continued to soar in the past year with the total volume peaking at $8.4 Billion at reporting time, the space is still plagued by the persistent problem of high transaction fees on the Ehereum blockchain.

Due to the problem of congestion and scalability, users are forced to part with an average of $100 in fees for each trade, hence restricting the use of DEXs for small traders.

“Average trade size for the other DEXs range within $10k — $20k per day, which is very large compared with centralized exchanges which typically have average trade sizes between $2k and $4k. The large trades are likely due to Ethereum’s high transaction fees, which prevents more retail traders from using DEXs.” Kaiko said on Monday.

Another telling discovery is that while the average trade sizes on DEXs have surged over the past few months, the actual number of trades has stayed unchanged, suggesting that the participants are mostly whales. 

Whereas one can tell more about the activity on a DEX based on the daily volume, the chart below reveals that the smallest DEX by the number of trades has the highest average trade size between $500k — $1m per trade despite DEXs processing less than 50,000 trades per day.

Dogecoin’s Low Transaction Fees

Despite DOGE’s transaction fees increasing considerably since December last year following a surge in the coin’s price, the fee remains largely lower at an average of $0.65 per transaction. 

The Doge developer team has also been working around reducing the fees even further by upgrading node operators following calls by Elon Musk and users of the resurgent cryptocurrency. In 2014 the 1 DOGE fee per kilobyte was introduced to ward of on-chain scams. Currently, there are proposed changes to lower the default fee rate to 0.001 DOGE.

That said, DOGE remains a go-to cryptocurrency for most companies as they seek to adopt the asset as a form of payment for its cheap transaction fees. Companies and entities such as AMC, Dallas Mavericks, Ask The Doctor among others are already accepting the cryptocurrency.

At press time, DOGE is pressing upwards after a little push from the Dogefather and is currently trading at $0.2189

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