Ethereum gas fees have hit a 20-month low as the market declines.
The average transaction fee on Ethereum is currently just over $2.
While the market slump has reduced network congestion, demand for Ethereum block space remains high.
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The ongoing slump in the crypto market has caused Ethereum gas fees to drop.
Ethereum Transaction Fees Plummet
It turns out there’s a silver lining to the crypto bear market for active Ethereum users.
Gas fees on the top smart contract blockchain have plummeted to their lowest dollar price since November 2020 thanks to a decline in the price of ETH and network activity. According to Etherscan data compiled by YCharts, the average fee to make a transaction on the Ethereum network is currently 21 Gwei, the equivalent of 0.0021 ETH. With ETH currently trading at around $1,100, that comes to about $2.31.
Ethereum average gas price (Source: YCharts)
Ethereum gas fees skyrocketed to record highs over the course of 2021 as ETH rallied along with the rest of the crypto market. An explosion of interest in NFTs contributed to the rise as the vast majority of non-fungible asset trading happened on Ethereum. At the height of the market frenzy dubbed NFT summer, minting NFTs set users back hundreds of dollars and more complex transactions came in even higher as the network became increasingly congested. As a result, alternative Layer 1 blockchains like Solana, Avalanche, and the ill-fated Terra soared by enticing users, many of them speculators in the retail market, with lower transaction fees.
Since Ethereum and the broader crypto market peaked in November 2021, gas fees have steadily declined. ETH has lost 77% of its dollar value since the peak, which means the dollar cost per transaction has also fallen. The last time Ethereum transactions came in under the $2.50 mark was in November 2020 when ETH traded at around $500.
Ethereum daily transactions chart (Source: Etherscan)
Data from Etherscan shows that the average number of daily transactions has also fallen since the market topped. Meanwhile, the rising adoption of Layer 2 solutions like Arbitrum and Optimism, which have grown to a collective total value locked of around $2.7 billion over the past year according to L2Beat, has also eased congestion on Ethereum mainnet. Still, barring a brief dip last month, the network has consistently processed 1 million daily transactions for the past two years, suggesting that demand for block space exists regardless of whether ETH is rallying or reeling.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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