Ethereum’s gas fees have plummeted to their lowest point in five years, marking a significant shift in the blockchain’s transaction landscape. As of August 10, the median transaction fee dropped to 1.9 gwei, a staggering 98% decrease from the 83.1gwei high recorded earlier this year.Â
This drop has continued, with low-priority transactions priced at just 1 gwei, or roughly seven cents, according to recent data from Etherscan.
The decline in gas fees can be attributed to the Ethereum Dencun upgrade in March, which introduced nine Ethereum Improvement Proposals (EIPs), and that led to the lowest point of ether’s supply since August 2022. Notably, one of these proposals implemented proto-danksharding—also known as data blobs—designed to lower costs for layer-2 networks.
These layer-2 solutions, which operate on top of Ethereum’s mainnet, have increasingly absorbed transaction activity, leading to reduced demand on the base layer.
Despite the apparent benefits, there is growing concern within the Ethereum community. Martin Köppelmann, co-founder of Gnosis, voiced his apprehension on August 10, suggesting that Ethereum needs to renew layer-1 activity.
Köppelmann highlighted that to sustain staking rewards, gas fees need to be at least 23.9 gwei. He also hinted that increasing the gas limit might be a strategic move to address the current low-fee environment. In March, Gnosis Chain activated the Dencun hard fork to reduce transaction fees on Ethereum.
Layer-2 networks like Base, Arbitrum, and Taiko have dramatically outpaced Ethereum’s base layer in transaction volume. Recent figures show Base alone processed over 109 million transactions in the past month, compared to Ethereum’s 33 million. The combined transaction count for Arbitrum and Taiko exceeded 97 million.
With fewer ETH being utilized for transactions and staking payouts, the total supply of Ethereum has surged, with nearly 13,400 ETH (valued at $34.1 million) added in the past week.
