Ethereum Gas Fees Hit 20-Month Low Amid Market Downturn

key takeaways

  • Ethereum gas fees have hit a 20-month low as the market falls.
  • The average transaction fee on Ethereum is currently just over $2.
  • While the market crash has reduced network congestion, demand for Ethereum block space remains high.

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The ongoing crash in the crypto market has caused Ethereum gas fees to drop.

Ethereum transaction fees plummet

It turns out that there is a silver lining to the crypto bear market for active Ethereum users.

Gas fees on the leading smart contract blockchain have plunged to their lowest dollar price since November 2020 thanks to a decline in the price of ETH and network activity. According to data from Etherscan compiled by YCharts, the average fee to make a transaction on the Ethereum network is currently 21 Gwei, the equivalent of 0.0021 ETH. With ETH currently trading at around $1,100, that works out to around $2.31.

Average Ethereum Gas Price (Source: YGraphics)

Ethereum gas fees soared to record highs over the course of 2021 as ETH rallied along with the rest of the crypto market. An explosion of interest in NFTs contributed to the rise, as the vast majority of non-fungible asset trading was done on Ethereum. At the height of the market frenzy called NFT summer, NFT minting set users back hundreds of dollars, and more complex transactions increased further as the network became increasingly congested. As a result, alternative Layer 1 blockchains like Solana, Avalanche, and the ill-fated Terra exploded by attracting users, many of them speculators in the retail market, with lower transaction fees.

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Since Ethereum and the crypto market in general peaked in November 2021, gas fees have steadily decreased. ETH has lost 77% of its dollar value since the peak, meaning the dollar cost per transaction has also fallen. The last time Ethereum transactions went below the $2.50 mark was in November 2020, when ETH was trading at around $500.

Ethereum daily trade chart (Source: etherscan)

Etherscan Data shows that the average number of daily transactions has also fallen since the market peaked. Meanwhile, the growing adoption of Layer 2 solutions such as Arbitrum and Optimism, which have grown to a collective total value locked of around $2.7 billion over the past year according to L2Beat, has also eased congestion on the Ethereum mainnet. Still, barring a brief dip last month, the network has consistently processed 1 million daily transactions for the past two years, suggesting that demand for block space exists regardless of whether ETH is surging or faltering.

Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.

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