Binance is accused of intentionally raising Ethereum gas fees, and the official response states that it is to ensure smooth withdrawals

This article is an original piece by Chain Catcher, authored by Gu Yu.

Although Ethereum 2.0 is approaching and Layer 2 solutions are emerging, the Gas fees for Ethereum transactions remain high, with users often needing to spend tens of dollars to complete a transaction in a few minutes. In this context, public chains like Binance Smart Chain (BSC) have become the choice for many DeFi users, leading many projects to shift their development to the BSC public chain. Recently, several ecosystem tokens, including BNB, have seen explosive price increases.

However, in recent days, there have been increasing voices in the crypto industry suggesting that Binance may be one of the behind-the-scenes drivers of the high Ethereum gas fees, prompting more users to move to BSC for transactions, lending, and other operations.

On February 18, Twitter user @BulloTaurus tweeted that after extensive research, he found that Binance is one of the main spenders of Ethereum Gas fees, with 6 out of the top 10 addresses marked as belonging to Binance.

BulloTaurus also questioned in the comments, why does Binance use 270 Gwei for withdrawals when the average Gwei is 150? Why does Binance pay 50% more in fees to save a few seconds in transaction confirmation time?

Chain Catcher checked the aforementioned situation on Etherscan at 4 PM on February 20 and found that in the last 24 hours, 5 out of the top 10 Ethereum gas spenders still belonged to Binance, totaling 560.8 ETH, far exceeding other exchanges.

One possible reason is that Binance's trading volume and user count have been continuously rising, leading to a significant increase in user withdrawal transactions, thus resulting in higher total gas expenditures.

However, after comparing the specific transfer records of Binance with those of Huobi and other exchanges, Chain Catcher found that this reason does not fully explain why Binance incurs such high gas fees, as Binance's average gas fee for a single ERC20 token transaction is still significantly higher.

To better compare the average gas expenditures of multiple exchanges, Chain Catcher compiled the ERC20 transfer records of Binance, Huobi, FTX, Crypto.com, etc., between Ethereum blocks 11892460 and 11892480. During this period, Binance had two addresses that conducted 85 transactions, with an average gas fee of 0.014 ETH, while the average gas fee for Huobi, FTX, and other exchanges was around 0.009 ETH, meaning Binance's ERC20 token transfer gas fees are 55.5% higher than the average level of other exchanges.

Comparison of average gas fees across major exchanges

Transaction records of Huobi addresses

Transaction records of FTX addresses

Transaction records of Binance addresses

Through the above analysis, it can be generally concluded that Binance is paying gas fees significantly above the market average for withdrawal transactions, and with a considerable number of transactions, this objectively exacerbates the congestion of the Ethereum network, making it one of the main behind-the-scenes drivers of the high Ethereum gas fees.

Perhaps Binance can explain that the purpose is to create a faster withdrawal experience for users, but given Binance's strong support for the development of the BSC public chain, it is hard not to suspect that they are intentionally raising Ethereum network gas fees, increasing the threshold for ordinary users to participate in the Ethereum ecosystem, and thus attracting users to the BSC public chain to engage in various DeFi ecosystems.

In fact, similar speculations have been widely discussed on social media platforms like Twitter and WeChat. On the evening of February 19, a series of WeChat group chat records circulated, showing that a user @Vitalik inquired whether the congestion of ETH during this time was due to Binance's consistently high gas fees for deposits and withdrawals. Vitalik replied, "Haha, I know, the first batch of rollups supporting EVM may go live next month, which will reduce transaction fees by 100 times."

Perhaps seeing the numerous doubts, Binance founder Changpeng Zhao also specifically tweeted today to express support for ETH, stating, "Binance Pool is now the 11th largest ETH mining pool, and we still very much support ETH." Zhao said.

In response to these doubts, Binance specifically told Chain Catcher, "Due to the mechanism of ETH wallet withdrawals, if a transaction is delayed due to insufficient GAS fees, it will cause subsequent withdrawal queues to be unable to execute. To ensure smooth withdrawals from the entire platform's ETH wallet, we temporarily adjusted the GAS fee to 300 last night, and it has now been adjusted back to normal levels."

However, according to Chain Catcher's inquiry, the average gas fee for Binance's outgoing transactions is still significantly higher than that of other exchanges. On social media, doubts about Binance are still fermenting and spreading, and Chain Catcher will continue to monitor the situation.