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The good news for ETH hodlers about insane gas fees

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Cointelegraph By Martin Young

Ethereum and DeFi proponent Ryan Sean Adams has drawn attention to how high gas fees relative to the current Ether price could actually be a bullish sign. 

Citing this week’s Grayscale research paper ‘Valuing Ethereum’ the Bankless commentator claimed that Ethereum is “actually getting cheaper” from a price to sale ratio aspect.

A price to sales ratio (P/S) is usually calculated by taking a company’s market capitalization and dividing it by revenue from sales. In this case, taking Ethereum’s $184 billion market cap dividing it by the total revenue derived from transaction fees provides a similar metric. The lower the P/S ratio, the more attractive the investment (although there’s debate as to how applicable it is to decentralized digital assets.)

According to the Grayscale report, Ethereum’s P/S ratio at the start of 2021 was the lowest it has been for over three years at around 0.02.

While Ethereum is not a company, and transaction fees are not technically sal revenue, institutional-grade investment vehicles such as Grayscale often use traditional methods to help value assets. The report said:

“A lower ratio indicates that the network is generating high revenue relative to Ether’s historical market capitalization, and thus may be undervalued.”

Given the enormous effort going into reducing ETH fees with Eth2, layer-two scaling and the Ethereum Improvement Proposal EIP-1559, this revenue is also far from guaranteed into the future.

However, high transaction fees are indicative of high demand on the network, which is good news for miners and long term holders (if not for those wanting to use it on a daily basis.)

According to BitInfoCharts, the average Ethereum transaction fee has skyrocketed to an all-time high of around $23. This makes using the network totally unviable for smaller transactions which eliminates a lot of DeFi activity for the average trader or investor.

Grayscale and Ethereum advocates, on the other hand, see the positive aspects:

“We can observe from the data that the price of Ether tends to move with underlying activity on the network […] multiple metrics are reaching new highs, including active addresses, hashrate, and network fees – a positive sign for investors.”

Grayscale also suggested that the gas-lowering EIP-1559 could create a positive feedback loop which is extremely bullish for ETH prices.





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Ethereum

Price analysis 3/5: BTC, ETH, ADA, BNB, DOT, XRP, UNI, LTC, LINK, BCH

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Cointelegraph By Rakesh Upadhyay

Selling pressure from global equities markets continues to weigh on Bitcoin price as traders endeavor to flip the $50,000 level back to support.



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PAID Network exploiter nets $3 million in infinite mint attack

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Cointelegraph By Andrew Thurman

Paid Network, a DeFi platform aimed at real-world businesses, has been exploited today in an “infinite mint” attack that has sent PAID token prices plunging upwards of 85%.

While the exploit netted nearly $180 million in PAID tokens at the time of the attack — what would have comfortably been the largest exploit of a DeFi protocol — the hacker’s payday will end up being far less. One observer noted that the attacker’s wallet only converted some of their tokens to wrapped ether, leaving the rest in rapidly-devaluing PAID tokens: 

The attacker’s wallet still has over 57 million PAID tokens worth $37 million. 

The exploit is conceptually similar to an attack on insurance protocol Cover that took place in late December last year. In that instance, the team took a “snapshot” of holders prior to the attack and issued a new token, returning the supply of the token to pre-exploit levels.

The team confirmed on Twitter that they are currently planning for a snapshot and restoration:

However, token holders anxious for a resolution may be out of luck. Some in the community are speculating that the attack on PAID wasn’t an exploit at all, but instead a “rugpull” — a colloquial term for an insider designing contracts to specifically make them exploitable and swiping user funds. 

Nick Chong of Parafi Capital noted on Twitter that Paid’s deployer contract, an externally controlled account, transferred ownership of the deployer to the attacker shortly before the mint, indicating that a member of the team either rugpulled, or errantly allowed the attack to take place with a security lapse:

Additionally, a DeFi risk analysis account @WARONRUGS warned of exactly this exploit in late January, noting that the contract owner can mint PAID tokens at any time:

An on-chain note sent to the attacker has ominously warned that “the LAPD will be in contact with Kyle Chasse very shortly.” Kyle Chasse is the CEO of Paid Network.

Paid Network did not respond to a request for comment by the time of publication.