Ethereum gas fees are falling to their lowest level since March 2020
Ether price isn’t the only thing that has fallen in recent months. The cost of using the Ethereum network has also decreased.
The average gas on the Ethereum blockchain is according to a. at its lowest level since March 2020 report from cryptocurrency research firm Coin Metrics.
Source: Coin Metrics
Gas refers to transaction fees on Ethereum and is currently in the 15-30 gwei range. This is about 10 times less than in April when transaction fees rose to double digits (USD) due to the skyrocketing price of Ether.
A Gwei is a fraction of an ether (0.00000001 ether) and also a fraction of a coin. But if gas charges are so low, why is it now an average of $ 8.15 for transactions, up from $ 2.31 on June 26th?
That’s because the two metrics are related but different. The transaction fees are determined by multiplying the gas fee by the amount of gas consumed. Different types of transactions require higher gas consumption. Therefore, bidding on NFT at auction, executing a transaction on a decentralized exchange (DEX), or sending Ethers to someone can have different potential costs as these transactions differ in value.
In other words, you use more fuel driving across the country than just driving around town – regardless of the gasoline cost per gallon.
Just like actual fuel, gas charges go up or down as needed. As more and more people use the network, the price increases.
According to Coin Metrics, this is part of what is happening here as projects increasingly use “scalable solutions” like Polygon and Arbitrum that take some of the load off Ethereum and still benefit from it.
But according to Coin Metrics, there are two other factors:
First, gas began to fall in late April – just before the price of ether plummeted from a record $ 4,165 to currently $ 2,279 – after the gas limit was raised from 12.5 million gwei to 15 million gwei per block. The result of the change is that more transactions can be included in each block, which reduces demand.
Second, arbitrage programs that seek to profit from trades on traditional decentralized exchanges have higher fees – they willingly pay more gas to advance such transactions because they are willing to make money from the trade. But this activity is also moving away from the Ethereum blockchain and towards parallel chains, like the alleys that lead to Ethereum’s highways.
But this will change. Ethereum gas and fees are expected to be adjusted on August 4th with the “London” upgrade.