Ethereum (ETH) has achieved its lowest average gas fees since November 2016, marking a significant milestone in the network’s development. Data from Dune Analytics reveals that on June 30, the average gas fee dropped to a mere 3 Gwei, equivalent to $0.14. Interestingly, nine out of the 10 cheapest hours for gas fees occurred just last week.
Gas fees play a crucial role in the Ethereum network as they cover the expenses of various operations and incentivize validators, thereby ensuring the network’s security. These fees also serve as a deterrent against spam attacks.
Analysts attribute the significant drop in fees to the improved efficiency of the layer-1 (L1) market. This efficiency is a result of increased layer-2 (L2) volume and the implementation of “blob transactions” through EIP-4844, which has enhanced Ethereum’s scalability.
It is worth noting the historical context of gas prices on Ethereum. A year ago, median gas prices ranged between 15 to 20 Gwei, a stark contrast to the current much lower figures. In March 2024, peak gas prices reached 83 Gwei, as recorded on March 5 by Dune Analytics.
However, since the Dencun upgrade on March 13, median gas prices have steadily declined. For instance, Ethereum’s median gas price hit a three-year low in April, dropping to 6.43 Gwei on April 27, which is the seventh-lowest single-day median gas price recorded in the past three years. Furthermore, on June 23, it dropped even lower, falling below 3 Gwei, a level not seen since 2020. This sparked a series of some of the lowest hours for gas fees on Ethereum in the last seven years.
The decreasing gas prices are seen as a positive development by industry experts, as they indicate that Ethereum’s L2 networks are effectively reducing transaction costs on the second-most valuable blockchain in the world.
The significance of lower gas fees lies in several aspects. Firstly, lower fees make the Ethereum network more accessible to a wider audience, encouraging more users and developers to engage with the platform. This can lead to increased adoption of Ethereum-based applications and services, further solidifying the network’s position in the blockchain ecosystem.
Additionally, affordable gas fees help maintain the network’s security and functionality without excluding smaller participants. This democratization of access is crucial for fostering innovation and ensuring that the benefits of blockchain technology are widely distributed.
Lastly, lower gas fees have the potential to stimulate activity in sectors such as decentralized finance (DeFi) and non-fungible tokens (NFTs), which have previously been hindered by high transaction costs.
In conclusion, Ethereum’s record-low gas fees mark a significant milestone for the network and have several positive implications for its growth, adoption, and impact on various sectors within the blockchain ecosystem.