A cryptocurrency whale has paid a $7.5 fee to move over $1 billion worth of Synthetix Network (SNX) tokens on the Ethereum blockchain, at a time in which the price of ETH itself is close to hitting its all-time high near $1,400.
According to Etherscan data, the funds were moved from a contract called “Synthetix: Reward Escrow” to an Ethereum address that currently only holds the $1 billion in SNX tokens and appears to be a second version of the Synthetix Rewards escrow contract.
The funds are likely to be used to reward users staking their tokens. Synthetix, it’s worth noting, is an Ethereum-based protocol for the issuance of synthetic assets. These assets are financial instruments in the form of ERC-20 contracts – referred to as Synths – that track and provide returns of another asset.
These can range from cryptocurrencies to real-world assets like gold and silver, and even to indexes. These tokens are backed by a 600% collateralization ratio determined by community governance. Users who stake tokens are eligible for staking rewards denominated in SNX. Per the project’s founder Kain Warwick:
When you stake your tokens, you are eligible to receive two types of rewards if your collateralization ratio remains at 600%: staking rewards, denominated in SNX, and exchange fees from all Synth trades, denominated in sUSD. Exchange fees are distributed in accordance with the amount of debt each staker has issued.
The funds moved are likely a part of the pool used for these rewards. The $1 billion transaction, first spotted by Decrypt, raised eyebrows on social media, with some users pointing out that $7 is a meaningless fee to move such a large amount of tokens.
Others, however, noted that if a user was trying to move $1 the transaction fee would have to be at the same level, making it unfeasible to move small amounts. Transaction fees on Ethereum have surged since the price of the cryptocurrency moved up earlier this year.
Data fromBitInfoCharts shows that in January 2020, the average transaction fee on the Ethereum blockchain was less than $0.08. This year, average transaction fees hit a new $16.5 all-time high before dropping to $6.4 at press time. projects like Maker, Uniswap, Aave, and others kept on adding new users and ETH’s popularity grew.
As CryptoGlobe reported, search interest for Ethereum hit a new all-time high this week, at a time in which the number of Ethereum whales keeps on growing along with the cryptocurrency’s price.
Featured image via Pixabay.