Ethereum transaction fees have dropped to their lowest since December because blockchain activity has cooled while use of Ethereum layer 2 solution protocols such as Polygon (MATIC) has heated, according to blockchain data and analysts.
As of June 27, the average transaction fee on the Ethereum blockchain was $4.42, according to data from Coin Metrics. That’s down from fee levels above $60 as recently as mid-May.
Gas refers to the computational efforts required to execute specific operations on the Ethereum network. A fee, paid in ether (ETH, -1.92%), is required to successfully conduct a transaction on Ethereum. Ethereum is the second-biggest blockchain network after Bitcoin.
High gas fees have been one of the biggest challenges for Ethereum at a time of increasing network usage. Interest in decentralized finance (DeFi) has been surging along with the price of ether.
Analysts told CoinDesk that lower gas fees are a natural response to the crypto market’s recent cooldown.
At press time, ether was trading around $2,103.77, less than half of the all-time high at $4,382.73 reached on May 11, according to CoinDesk 20 data.
Congestion on the Ethereum blockchain has dropped with the cryptocurrency’s price. Transactions on the network fell to around 1.1 million on June 27, down from May’s high at around 1.7 million, according to Coin Metrics. Data from CoinGecko shows ether’s trading volume on exchanges has also come down significantly.
Source: CoinDesk