As a researcher who’s been closely following Ethereum for years now, I must say that this current state of low gas fees is truly a breath of fresh air. Remember those days when we were happily transacting at 200+ gwei? It feels like a lifetime ago!
The cost for transactions on Ethereum has fallen to its lowest level in five years, signifying a substantial change in the blockchain’s transaction environment. Specifically, as of August 10, the average transaction fee decreased to 1.9 gwei, representing an astounding 98% drop from the peak of 83.1gwei experienced earlier this year.
The ongoing decline persists, as transactions deemed less urgent are being processed for about 1 gwei, which is equivalent to around seven cents, based on the latest information from Etherscan.
Wow, just a penny’s worth of gas (1 Gwei) for a transaction on the Ethereum mainnet! Back in 2021, it cost more like $0.20 or so to make transactions due to high gas fees. 😄
— DarrenSRS (@DarrenSRS) August 12, 2024
The reduction in gas fees is linked to the Ethereum Denver upgrade in March, which encompassed nine Ethereum Improvement Proposals (EIPs). One of these EIPs introduced proto-danksharding, or data blobs, that aim to reduce costs for layer-2 networks and likely contributed to the lowest ether supply level since August 2022.
Over time, these second-layer solutions, functioning above the primary Ethereum network, have been taking over a larger share of transactions. This shift has resulted in less pressure being put on the fundamental layer, as demand for it has decreased.
Although Ethereum seems to offer significant advantages, there’s a rising unease within the community. Martin Köppelmann, one of Gnosis’ co-founders, expressed his worries on August 10, implying that Ethereum might require an upgrade in its core (layer-1) functionality.
Currently, Basefee is at one of its lowest levels in several years, hovering around 0.8 GWEI. To cover staking rewards, it would take approximately 23.9 times the current rate. In my opinion, Ethereum could benefit from increased Layer 1 activity once again. Contrary to what might seem logical at these low gas prices, increasing the gas limit could be an effective strategy.
— Martin Köppelmann 🦉💳 (@koeppelmann) August 10, 2024
As a crypto investor, I’ve noticed that for me to consistently earn staking rewards, gas fees should ideally be around 23.9 gwei. Moreover, it seems like raising the gas limit could potentially be a smart tactic in navigating the current low-fee landscape. In March, Gnosis Chain implemented the Dencun hard fork, which aimed to lower transaction fees on Ethereum.
It’s evident that secondary networks such as Base, Arbitrum, and Taiko have significantly surpassed Ethereum’s primary layer in terms of transaction volume. For instance, Base handled over 109 million transactions in the last month, which is more than triple the 33 million transactions on Ethereum. Moreover, the combined transaction count for Arbitrum and Taiko reached a staggering 97 million.
In recent days, there’s been a decrease in Ethereum being used for transactions and staking rewards, leading to an increase of approximately 13,400 ETH (equivalent to around $34.1 million) in total circulation over the past week.
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2024-08-12 14:14