TLDR
- Ethereum’s median gas price hit a 5-year low of 1.9 gwei on August 10, 2024
- Low-priority Ethereum transactions now cost around 1 gwei or about seven cents
- Layer-2 networks like Base are processing far more transactions than Ethereum’s main chain
- The daily amount of ETH burned dropped to 210 tokens on August 10, a 2024 low
- Some are concerned the low fees may impact Ethereum staking rewards
The cost to send transactions on the Ethereum blockchain has fallen to its lowest level in five years, according to recent data.
On August 10, 2024, the median gas price – the fee users pay to have their transactions processed – dropped to just 1.9 gwei. This marks a nearly 98% decrease from the year’s high of 83.1 gwei seen in March.
For users sending low-priority transactions, which are processed in about 10 minutes, fees have dipped even lower to around 1 gwei. In US dollar terms, this translates to approximately seven cents per transaction.
The dramatic decline in gas fees comes as activity on Ethereum layer-2 networks continues to climb. Layer-2 solutions are designed to handle a higher volume of transactions at a lower cost by processing them separately from the main Ethereum chain.
Data from analytics platform L2Beat shows that Coinbase’s layer-2 network, Base, processed over 109 million transactions in the past 30 days.
This far outpaces the 33 million transactions recorded on Ethereum’s main network during the same period. Other layer-2 networks like Arbitrum and Taiko have also seen significant transaction volumes, with a combined total of 97 million over the last month.
The shift in activity to layer-2 networks appears to be impacting Ethereum’s core blockchain. Transaction counts on the main Ethereum network dropped by more than 5% over the past week, while Base saw its transaction count increase by over 9% in the same timeframe.
As gas fees and on-chain activity have decreased, so too has the amount of ETH being burned, or permanently removed from circulation.
On August 10, only 210 ETH tokens were burned, marking the lowest daily burn rate for 2024. This represents a significant drop from the 5,000 ETH burned just five days earlier on August 5.
The plummeting gas fees and reduced network activity have raised concerns among some in the Ethereum community.
Martin Köppelmann, co-founder of Gnosis, expressed worry that the current gas prices may not be sufficient to fund staking rewards. These rewards are payments given to users who help validate transactions on the network. Köppelmann suggested that gas fees of at least 23.9 gwei are needed to adequately support staking rewards.
Basefee right now at a multi year low of ~0.8 GWEI. 23.9 would be required to offset staking rewards. IMO Ethereum needs to get more L1 activity again and even if it sounds counterintuitive at such low rates, raising the gas limit can be part of a strategy. pic.twitter.com/RaTkzKOx1r
— Martin Köppelmann 🦉💳 (@koeppelmann) August 10, 2024
“Ethereum needs to get more L1 activity again,” Köppelmann stated in a post on social media platform X. He added that “Even if it sounds counterintuitive at such low rates, raising the gas limit can be part of a strategy” to address the issue.
The recent Dencun upgrade to Ethereum, implemented in March 2024, introduced changes aimed at reducing transaction costs for layer-2 networks. This included the addition of “data blobs,” a feature designed to make it cheaper for layer-2 solutions to post transaction data to the main Ethereum chain.
As of August 12, 2024, the price of ETH, Ethereum’s native cryptocurrency, stood at $2,551.56, having fallen more than 4% over the previous 24 hours.
