According to U.Today, the Ethereum network recorded its lowest fees since 2016 on June 30. Data from Etherscan and Dune Analytics show that the average gas fee is currently at 3 Gwei ($0.14). Gas fees are the costs of various operations on the Ethereum blockchain, and by paying these fees, users help ensure the network's security. These fees also incentivize validators and prevent spam attacks.
During the 2021 bull run, Ethereum's gas fees were significantly high due to the high demand in the non-fungible sector (NFT), leading some to argue that the network was unsustainable. This gave rise to more affordable alternatives such as Solana. However, despite strong transaction activity, Ethereum gas fees are currently at extremely low levels. The volume of the leading altcoin is on par with levels seen at the beginning of the year.
The decrease in fees can be attributed to a higher level of efficiency in the Layer-1 market, a result of the combination of Layer-2 volume and the introduction of 'blob transactions' with EIP-4844. This has significantly boosted Ethereum's scalability. Brian Smocovich, founder of Pistachio Fi, noted that while there may still be gas spikes above 15 gwei during times of higher activity, the gas market has generally been more efficient post EIP-4844.
The significant drop in fees means that Ethereum is no longer a deflationary network, as the amount of fees to burn is very small. This contradicts those who were promoting the 'ultra sound money' narrative prior to the Dencun upgrade. Over the past week, 14,393 ETH has been added to the network, translating into an annual supply growth of 0.62%. The total supply of Ethereum currently stands at 120,185,061 ETH, indicating that it is on track to reach a new peak in 2024.