Ethereum Transaction Fees Drop to 4-Year Low Amid Network Updates

The lowest transaction fees in the last four years were recorded on the Ethereum network.

This decline signals the potential benefits that layer-2 solutions can bring to transaction costs.

Notably, the latest average transaction fee dropped below 3 gwei, a level not seen since January 2020.

Ethereum transaction fees hit a four-year low, a major milestone.

This past weekend, average transaction fees on the Ethereum (ETH ETH) mainnet dropped below 3 gwei; This level was last seen in January 2020. This remarkable decline highlights the effectiveness of layer-2 (L2) solutions that can potentially reduce transaction costs on the Ethereum network.

A year ago, ETH transaction fees typically ranged between 15 and 20 gwei. According to on-chain data platform Dune, the highest average transaction fee recorded this year was in March, with daily highs reaching as high as 83 gwei on March 5. Currently, the average transaction fee is recorded at approximately 4.69 gwei.

Since the Dencun update went live on the mainnet on March 13, transaction fees have steadily decreased. This update led to a dramatic 92% reduction in Ethereum's transaction fees. This significant decrease demonstrates the effectiveness of the update in improving network efficiency.

Shift to Inflation Trends

As transaction fees decreased, Ethereum's burn rate also decreased, leading to slight inflationary tendencies. Data from Ultrasound.money shows that the reduction in transaction fees has slowed the burn of ETH, resulting in a slight inflationary shift within the network. This development has important consequences for ETH's overall supply dynamics and future economic model.

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