Record-low Ethereum gas fees impact transaction costs and ETH burn rate under EIP-1559.
The decline in gas fees has resulted in a lower ETH burn rate, impacting Ethereum’s economics.
Despite low transaction costs, Ethereum’s price has experienced a downturn.
Ethereum has seen a decline in gas fees, reaching record lows not seen since mid-2019. This decline reflects a period of reduced network congestion, impacting transaction costs for users across the Ethereum blockchain.
Recent data from Dune Analytics reveals that the median gas fees on Ethereum have dropped to approximately 1.9 gwei as of August 10. This is the lowest level recorded in over three years, a stark contrast to the 83.1 gwei peak in March earlier this year.
Martin Köppelmann, co-founder of Gnosis, recently shared his thoughts via his X account, highlighting the low base fees, which currently sit around 0.8 gwei. Köppelmann suggests that the Ethereum network needs to encourage Layer 1 activity to balance out the staking rewards, even proposing an increase in the gas limit as a strategic measure to boost network activity.
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
Similarly, DarrenSRS commented on the low gas prices, recalling that in 2021, fees were as high as 200+ gwei, emphasizing the current ease of transactions due to minimal costs.
Holy cow 1 gwei gas on ethereum mainnet.I still remember when we were happily doing transactions at 200+gwei back in 2021 😅 pic.twitter.com/Ogetdmxx15
— DarrenSRS (@DarrenSRS) August 12, 2024
The Etherscan Ethereum Gas Tracker provides real-time updates on gas prices, categorizing them into low, average, and high tiers. Currently, all categories show exceptionally low fees, around 1 to 2 gwei, indicating a less congested blockchain environment.
Source: DarrenSRS
This tracker also offers critical network statistics such as the number of the last block, pending transaction queues, and average block size and utilization, which are crucial for developers and users planning their transactions.
The implementation of EIP-1559, known as the London hard fork in August 2021, introduced a mechanism where the system burns the base fee per transaction, reducing the overall ETH supply when network activity is high. However, the recent low fees mean less ETH is being burned, influencing the economic space of Ethereum.
Despite the low transaction costs, Ethereum’s price has declined, currently sitting at $2,549.41, a 4.07% decrease over the last 24 hours. With a live market cap of approximately $306.62 billion, Ethereum maintains its position just behind Bitcoin in the crypto market rankings.
The post EIP-1559 & Ethereum: Low Fees, Less ETH Burn, Price Impact appeared first on Coin Edition.
