0%

How Coinbase handled ETH network congestion on August 1, 2020

Aug 3, 2020 3 min read
News Article Banner Image

Background

All transactions on Ethereum are required to pay a fee in order to be processed by the network. This network fee is determined by the variable demand for fixed processing capacity on the Ethereum network — when many users are attempting to send transactions at the same time, fees will rise, and they will fall when fewer users are using the network.

At Coinbase, we determine a fee rate that maximizes the speed that a transaction will be processed while simultaneously minimizing how much our users must pay. To this end, we actively track the fee required for a transaction to be included in the subsequent few blocks in real-time. However, spikes in network fees can lead to transactions becoming stuck — i.e. a newer, higher fee transaction will be prioritized by miners over an older, lower fee transaction.

August 1, 2020 Fee Spikes

On August 1st, at around 9:45pm PST, we observed a spike in transaction fees on the decentralized network.

Throughout this spike period, our systems performed as expected and determined a fee that was accurate at the time of estimation. This spike led to a backlog of transactions that were not being picked up by miners and resulted in delayed withdrawals from Coinbase.

Other major exchanges and wallets determine fees in the same way, leading to many users’ deposits into Coinbase being delayed as well.

At the peak of this fee spike we observed a total of 559 transactions being delayed across ETH and ERC20s with the average delay spiking at 11:30pm PST at 105 minutes. Transactions broadcast at and after the peak of this spike (10:05pm PST) were not impacted.

The fee spike ended at 10:05pm PST, causing the backlog of transactions to start being processed by the network. The backlog was fully processed by 11:40pm PST.

Looking Ahead

Fee spikes are a common occurrence and are often observed when the network is congested due to price volatility or large network activity. At Coinbase we have implemented transaction replacement which allows us to adjust fees for transactions that we submit to the network after the submission.

As the activity on the Ethereum ecosystem is increasing we are actively monitoring and evaluating our fee strategies to find the right balance between being a good citizen of the network and providing the best experience to our customers.

If you are interested in working on our Crypto team — we are actively hiring. Please reach out and we would love to chat with you.

was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Popular news

How to Set Up and Use Trust Wallet for Binance Smart Chain
#Bitcoin#Bitcoins#Config+2 more tags

How to Set Up and Use Trust Wallet for Binance Smart Chain

Your Essential Guide To Binance Leveraged Tokens

Your Essential Guide To Binance Leveraged Tokens

How to Sell Your Bitcoin Into Cash on Binance (2021 Update)
#Subscriptions

How to Sell Your Bitcoin Into Cash on Binance (2021 Update)

What is Grid Trading? (A Crypto-Futures Guide)

What is Grid Trading? (A Crypto-Futures Guide)

Start trading with Cryptohopper for free!

Free to use - no credit card required

Let's get started
Cryptohopper appCryptohopper app

Disclaimer: Cryptohopper is not a regulated entity. Cryptocurrency bot trading involves substantial risks, and past performance is not indicative of future results. The profits shown in product screenshots are for illustrative purposes and may be exaggerated. Only engage in bot trading if you possess sufficient knowledge or seek guidance from a qualified financial advisor. Under no circumstances shall Cryptohopper accept any liability to any person or entity for (a) any loss or damage, in whole or in part, caused by, arising out of, or in connection with transactions involving our software or (b) any direct, indirect, special, consequential, or incidental damages. Please note that the content available on the Cryptohopper social trading platform is generated by members of the Cryptohopper community and does not constitute advice or recommendations from Cryptohopper or on its behalf. Profits shown on the Markteplace are not indicative of future results. By using Cryptohopper's services, you acknowledge and accept the inherent risks involved in cryptocurrency trading and agree to hold Cryptohopper harmless from any liabilities or losses incurred. It is essential to review and understand our Terms of Service and Risk Disclosure Policy before using our software or engaging in any trading activities. Please consult legal and financial professionals for personalized advice based on your specific circumstances.

©2017 - 2024 Copyright by Cryptohopper™ - All rights reserved.