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Ethereum gas prices spiked up to 77 gwei yesterday as users rushed to mint VMPX tokens, a project launched via XEN.<\/p>\n
XEN is an ERC-20 \u2014 the standard for smart contract tokens on Ethereum \u2014 and is created through \u201cproof of participation\u201d where users must connect their wallet and express how long they are willing to wait to receive the token.<\/p>\n
The value of XEN \u2014 or any other token that uses its smart contract to launch \u2014 is correlated to the number of people who want that specific token, as described in XEN’s white paper<\/a>,<\/p>\n Users do not need to lock in any assets to mint the token and simply need to pay the transaction fee. Essentially, these tokens are designed to maximize block space and increase gas prices. They do not appear to have inherent value unless there is demand. <\/p>\n One particular user paid up to 1.3 ETH (about $2,500)<\/a> in gas fees to mint the VMPX token. It is unclear how much profit, if any, the user made from selling the token.<\/p>\n Pseudonymous twitter user zilbaghodler noted<\/a> that \u201cthey are selling straight into the LP [liquidity pool] and making around $40 per $2300 they spend.”<\/p>\n This type of behavior significantly drives up price of gas<\/a> for regular traders and can hinder mainstream adoption of blockchain technology.<\/p>\n \u201cThere is no trivial way to stop this,\u201d said software engineer and cryptocurrency trader Eric Wall. tweeted<\/a> in May. “The way you limit ‘bloat’ is by setting block size \/ gas limits at the consensus level.”<\/p>\n Although it is an uncommon case, Wall notes that these types of challenges will continue to rise as Ethereum scales.<\/p>\n \u201cThey push us to make sure we have [layer-2] solutions in place and wallet infrastructure that can accommodate it,\u201d Wall wrote<\/a>, \u201cIt’s a stress test. It’s good and you should stop crying about it.”<\/p>\n Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter<\/a> now.<\/strong><\/p>\n Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief<\/a>,<\/strong><\/p>\n Can’t wait? Get our news the fastest way possible. Join us on Telegram<\/a> and follow us on google news<\/a>,<\/strong><\/p>\n
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