The gas fees on the Ethereum Layer 1 blockchain dropped to just 0.067 Gwei on Sunday, due to the historic market crash in October that triggered a downturn in the crypto market.
According to Etherscan, the average cost of executing a swap on Ethereum is currently only $0.11, the fee for non-fungible token (NFT) sales is $0.19, the cost of bridging digital assets to another blockchain network is $0.04, and the fee for on-chain lending is $0.09.
Ethereum network transaction fees peaked at 15.9 Gwei on October 10, when a market flash crash caused some altcoins to lose over 90% of their value within 24 hours.
However, by October 12, the fees fell back to just 0.5 Gwei and remained below 1 for most of October and November.
Investors and traders may take advantage of the low transaction fees to execute on-chain trades at the base layer. However, analysts and crypto industry executives warn that excessively low fees could pose a threat to the Ethereum ecosystem.
During the bullish market of 2021, transaction fees on Ethereum Layer 1 could reach as high as $150 or more during network congestion.
However, with the Ethereum Dencun upgrade in March 2024 reducing transaction fees on Ethereum's Layer 2 scaling networks, fees have significantly decreased, leading to a 99% drop in Ethereum's revenue.
Critics argue that low network fees are unsustainable for any blockchain network, as the lack of incentives for validators or miners to process transactions and secure the blockchain presents financial and security challenges.
As fees respond to user demand, low fees and revenue may also indicate that users are moving away from a particular blockchain network.
In particular, Ethereum has chosen a scaling strategy that relies on independent Layer 2 network ecosystems, which, according to research from the cryptocurrency exchange Binance, is a double-edged sword.
While Layer 2 networks allow Ethereum to scale and compete with newer high-throughput chains, they also erode the revenue of the base layer, creating additional competition for Ethereum within its own ecosystem.
Related: Newly established crypto organization aims to set unified standards for blockchain transactions
Original article: “Ethereum (ETH) network activity slows, gas fees drop to just 0.067 Gwei”
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