BNB Smart Chain overtook Ethereum as the leading blockchain in decentralized exchange (DEX) volumes after the latter’s market share crumbled more than 50% to 22.3% on May 21, according to DefiLlama. The probable reasons behind the drop are Ethereum’s towering gas fees and uncertain macroeconomic factors.

Ethereum DEX Market Share Tanks More than 50%

Ethereum lost its position as the leader in DEX volumes, with its market share plummeting from 75.5% on March 5 to as low as 22.3% on May 21. The world’s second-largest blockchain has been flipped by BNB Smart Chain, which saw its market share grow from 5.6% to 61.1% during that period.

In addition, the number of active addresses interacting with Ethereum-powered decentralized applications (dApps) also declined. Over the past month, the top 12 dApps running on the Ethereum blockchain saw an 11% drop in active addresses.

One of the factors that likely contributed to the slump is Ethereum’s high transaction fees, caused by the network’s limited processing capabilities. The average gas fee on Ethereum remained above $8 over the past five weeks, leading to a notable reduction in the demand for smart contract usage.

Why Gas Fees Are High on Ethereum?

Meanwhile, high transaction fees on Ethereum likely weighed on investors’ appetite for the blockchain’s cryptocurrency, Ether (ETH), which can be seen from its recent price performance.

For the past 16 days, ETH’s price has failed to break above $1,920 – a price level the cryptocurrency fell below more than 30 days ago. At the time of writing, Ether was changing hands at $1,814, down 2.08% in the past 24 hours.

The surge in gas fees comes amid the latest meme coin trading mania, led by the significant interest in Pepecoin (PEPE). The token, inspired by the ‘Pepe the Frog’ meme, is currently the third-largest meme coin in the world, behind DOGE and SHIB. At the same time, the drastic increase in meme coin trading volumes pushed the average cost of a single transaction on Ethereum to jump above $15.82 earlier this month.

However, apart from rising gas fees, the uncertain macroeconomic environment prevents Ether from making a meaningful price leap. These macro headwinds include uncertainty around Federal Reserve’s future rate hike decisions, resilient inflation, and the ongoing debt ceiling standoff between President Joe Biden and the US Congress.

This article originally appeared on The Tokenist

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.