Ethereum Transaction Fees Slide Nearly 94% in the Last 68 Days
Similar to Bitcoin’s on-chain fees, transaction costs on the Ethereum network have recently dropped significantly. Ethereum’s network fees have dropped 93.7% in the last 68 days since March 5, 2024, from $30.33 per transfer to $1.91 per transaction.
Ethereum Fee Drop: 68-Day Overview
According to bitinfocharts.com, transactions on the Ethereum blockchain have become cheaper this week, with the average cost now sitting at around 0.00065 ETH, or $1.91 per transaction. Additionally, according to data collected by etherscan.io’s Gas Tracker, the cost of performing a basic ETH transfer currently ranges between 4 and 7 gwei, or $0.18 to $0.37 per transfer.
This weekend, the cost of conducting a decentralized exchange (dex) swap on Ethereum was estimated at $4.16 and $7.28, while the cost of conducting an NFT sale could be $7.03 to $12.31. Over the past 50 days, Ethereum has averaged just over 1 million transactions per day. The busiest day was March 22, 2024, with 1.324 million transactions recorded, while the slowest was April 4, 2024, with 1.091 million transactions recorded. During this period, the average daily transaction count was about 1.212 million.
Inflationary Ethereum and $12.5 billion in Ethereum burned
According to ultrason.money, Ethereum's current inflation rate is 0.895% per year. However, if Ethereum had not switched from a proof-of-work (PoW) system to a proof-of-stake (PoS) framework, the annual issuance rate under PoW would be 3.923%. Including the issuance rate, it has been 1010 days since the London fork on August 5, 2021.
The London upgrade essentially introduced Ethereum Improvement Proposal (EIP)-1559. The amendment changed the gas fee structure from a highest price auction model to a more stable burning base fee that is never put out of circulation. Since its implementation, 4.29 million ETH have been destroyed to date, worth $12.51 billion. As Ethereum goes through an inflationary phase, transaction fees have significantly decreased, which, while beneficial to users, has also created financial challenges for ETH validators.
These fee reductions affect the economic incentives associated with network security. In contrast, Bitcoin has lost more than 100 exahash per second (EH/s) in hashrate since the last halving due to a drop in hash price.This highlights the complex balance between ensuring affordability for user adoption and maintaining adequate compensation for validators as Ethereum monetary policy and transaction cost structure evolve.
How do you think Ethereum's lower transaction fees over the past 68 days will affect usage of the network and the broader crypto ecosystem?
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