Over the weekend, the PEPE memecoin craze drove a significant increase in profits for validators running the Ethereum network.
Ethereum validators are responsible for running the blockchain after the network transitioned to PoS consensus last year. According to the mevboost.pics dashboard, they get their MEV-Boost spending spikes over the weekend. Total revenue, including transaction fees, is roughly equivalent to what validators earned during the trading frenzy when Sam Bankman-Fried’s FTX exchange crashed.
On May 6th, the total rewards earned by MEV were 549.05 ETH and 2,457.73 ETH in gas fees, for a total of 3,006.78 ETH (worth $5.6 million at current prices). On September 11th, at the peak of the FTX crash, MEV earned 2,505.69 ETH compared to gas fees of 1,423.99 ETH for a total of 3,929.68 ETH ($6.1 million).
MEV (Maximum Extractable Value) is a characteristic of cryptocurrency trading, which has some similarities with arbitrage in traditional markets. It represents the additional income validators can earn by rearranging or optimizing the order of transactions in a block. The activity, which appears to be legitimate, is sometimes likened to running first.
The main tool used by Ethereum validators to bypass some of the controversial MEV activity is MEV-Boost, a piece of software created by Flashbots that allows validators to request blocks from the producer network. Authenticator connects to MEV-Boost through relay to obtain MEV.
In MEV rewards, validators are allocated a portion of the transaction fees of the blocks they propose, as well as the MEV in the blocks.
When PEPE sparked the memecoin craze, transaction fees skyrocketed, and validators made a lot of money off those fees.
Typically, during these periods, MEV itself constitutes a significant portion of validator revenue. However, when gas fees skyrocket, validators can also earn more money from it.
billionMEV-Boost payment in CHeynsohPEPE | stupidnoise: mevboost.image
Since 85% of Ethereum validators are connected to MEV-Boost, most of the data reflecting MEV activity is recorded through it.
Ethereum researcher Toni Wahrstätter, who uses his dashboard to track MEV-Boost activity, said:
“Ultimately, if people pay high fees for their transactions, block backers (validators) make a lot of money.”
The only time MEV rewards and gas fees were higher than PEPE craze was during a bank run where SVB and stablecoin USDC lost their peg.
Trading fee rewards have been reduced starting over the weekend, following PEPE and Binance’s discount model list It’s on a centralized exchange.
smallIs the hype over?
Pepecoin (PEPE) plunged more than 55% in the past 4 days after its outperformance made some investors millionaires overnight.
Only 3 weeks after its launch, PEPE began to plummet on May 5 after it was listed and traded on Binance, the world’s largest exchange.
At the time of the Binance listing announcement on Friday, PEPE was worth $0.00002023. The news fueled a frenzy for the memecoin, with the price surging to an all-time high (ATH) of $0.00004354.
However, the price has since fallen about 56% as early investors took profits. At the time of writing, PEPE was trading at $0.00001947, down 8% over the past 24 hours, according to CoinMarketCap.
Source: Tradingview
The drop in PEPE’s price has also affected its market cap, which grew from less than $1 million when it went public in mid-April to more than $1.2 billion on Friday. Assets are now at just over $766 million after shrinking by more than $400 million in April 2018. the past few days.
After the launch of several PEPE perpetual futures contracts over the past week, prices could fall further as traders take profits from their positions and utilize other trading strategies.
one tweet On-chain analytics platform Santiment said Monday that the increase in the number of ETH deposits could be due to PEPE traders shifting profits there. On-chain data shows that the number of exchange addresses interacting on the Ethereum network is now at its highest level since November 2021.
Following PEPE’s plunge, there was speculation that the token would repeat the mistakes of previous projects. Memecoins like DOGE and SHIB had a similar experience on PEPE, dropping sharply from their ATHs as the hype died down.
Moreover, the lack of utility and intrinsic value of PEPE that drove the surge in price confidence is temporary, making investors question whether it will last for long.
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