Ethereum Gas Fees Hit Record-Low in 6 Months, Layer 2 Solutions Minimise Network’s Congestion
Ethereum transaction fees have hit a record-low point. This is the lowest they have been since December, but it’s not too surprising given the recent decrease in blockchain activity.
This comes at a time when the utilization of Ethereum layer 2 solution protocols -like Polygon – is climbing.
At the time of writing, Ethereum’s average transaction fee stands at $3.7, a sharp decline from levels as high as $60+, which were registered as recently as mid-May.
Gas is the term used to refer to the computational endeavors needed to implement specific activities on the Ethereum network.
A fee, which is paid in the form of Ether, is needed to successfully facilitate a transaction on the network.
Now, one of the biggest challenges that Ethereum has been facing entails high gas fees. Meanwhile, more people have been showing their interest in decentralized finance (DeFi), which was increasing parallel to the cryptocurrency’s price.
According to analysts, the decrease in gas fees is a natural response to the digital currency’s recent cool off phase.
At press time, ether is trading at about $2,148.35, a big drop from the $4,382.73 achieved on May 11, which is actually more than double its current price.
Congestion on the network has also eased quite a bit, as the price has continued on its downward trend. By June 27, the volume of transactions on the network had fallen to 1.7 million.
Vishal Shah, the mastermind behind Alpha5 exchange, stated that a decrease in gas fees means that activity on the network is not high enough.
He went on to explain that since Ethereum serves as a foundation layer for several DEXs, this also indicates that speculative volume turning over has dropped as well.
Messari research analyst, Ryan Watkins, notes that another reason behind lower gas fees is the change in the types of bots employed by ether and other DeFi traders.
Initially, traders preferred using PGA or Priority Gas Auction. The majority have since shifted to Flashbots.