- Ethereum gas tariffs hit a 20-month low due to the market crash.
- The average transaction fee on Ethereum is currently over $2.
- While the market downturn has eased network congestion, the demand for Ethereum block space remains high.
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Ethereum gas fees have plummeted due to the ongoing recession in the crypto market.
ethereum transaction fee lousy
It turns out that there is a silver lining to the crypto bear market for active Ethereum users.
Gas fees on the top smart contract blockchain have fallen to their lowest dollar price since November 2020, due to a drop in the price of ETH and network activity. According to Etherscan data compiled by YCharts, the average fee for transacting on the Ethereum network is currently 21 Gwei, which is equivalent to 0.0021 ETH. With ETH currently trading around $1,100, it is around $2.31.
Ethereum gas fees skyrocketed to record highs during 2021 as ETH rallied along with the rest of the crypto market. The explosion of interest in NFTs contributed to the growth as most of the non-fungible asset trading took place on Ethereum. At the height of the market frenzy in the NFT summer, the casting of NFTs returned users hundreds of dollars and more complex transactions became even more frequent as the network became increasingly congested. As a result, alternative Layer 1 blockchains such as Solana, Avalanche, and the unfortunate Terra grew out of luring users, many of whom were speculators in the retail market with low transaction fees.
Since Ethereum and the broader crypto market peaked in November 2021, there has been a steady decline in gas fees. ETH has lost 77% of its dollar value since the peak, meaning the dollar cost per transaction has also fallen. The last time Ethereum traded below the $2.50 mark was in November 2020 when ETH was trading at around $500.
Data from Etherscan shows that the average number of daily transactions has also declined since the market cap. Meanwhile, according to L2bit, the adoption of Layer 2 solutions such as Arbitrum and Optimism, which have grown to a collective net worth of about $2.7 billion over the past year, has also eased congestion on the Ethereum mainnet. Nevertheless, except for a brief drop last month, the network has processed 1 million daily transactions in a row for the past two years, suggesting that demand for block space exists whether ETH is rallying or rebounding.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.