The Ethereum ecosystem is currently experiencing a significant drop in gas fees, impacting both the mainnet and Layer 2 transactions. According to Etherscan Gas Tracker, the average gas fee on the mainnet is currently at 4 Gwei, which is approximately $0.21. Transactions can be processed for as low as 3 Gwei, or around $0.14. This decline in fees also extends to Layer 2 solutions such as Optimism, Base, Arbitrum, and Linea, where fees are below $0.01 per Gasfees.io data. Market observers attribute this fee decline to the increased use of Layer 2 scaling solutions and the adoption of blob transactions introduced with the Dencun hard fork in March.
As a result of the lower gas fees, less Ethereum is being burned, making the network inflationary. In the past 24 hours, less than 200 ETH were burned, leading to Ethereum’s supply becoming inflationary with a growth rate of 0.67%. Over 60,000 ETH was added to the network in the last 30 days. This trend was observed in the second quarter as well, with a 66.7% drop in the burn rate affecting ETH’s supply-demand balance. OKX Ventures noted that as network activity slows and burns decrease, managing Ethereum’s supply and inflation will be crucial.
Furthermore, the recent launch of Ethereum exchange-traded funds (ETFs) has added complexity to the Ethereum ecosystem. The SEC approved eight new spot Ethereum ETFs, including the conversion of Grayscale’s ETHE fund, for trading on US exchanges. These products saw inflows exceeding $1 billion during their first four days of trading, although there was a roughly $1.5 billion outflow from Grayscale’s ETHE. Analysts believe that these trends show the network is in a “good place,” with the Ethereum ecosystem being affordable for end users and new capital flowing into the system.
With the decline in gas fees and the adoption of Layer 2 scaling solutions, the Ethereum ecosystem is experiencing a positive shift. The decreased gas fees on the mainnet and Layer 2 networks are making transactions more affordable for users and contributing to lower transaction costs. This trend has also resulted in less Ethereum being burned, making the network inflationary and affecting the supply-demand balance. As the network activity slows and burns decrease, managing Ethereum’s supply and inflation will become crucial.
In addition, the recent launch of Ethereum exchange-traded funds (ETFs) has brought further complexity to the Ethereum ecosystem. The approval of eight new spot Ethereum ETFs by the SEC, along with the conversion of Grayscale’s ETHE fund, has seen significant inflows into the market. While there was a large outflow from Grayscale’s ETHE, analysts believe that the overall trend indicates a positive development for the Ethereum ecosystem. With new capital flowing into the system, the Ethereum ecosystem is in a good place according to crypto analyst Koffi.
Overall, the Ethereum ecosystem is currently experiencing a historic drop in gas fees, leading to more affordable transactions on both the mainnet and Layer 2 networks. This decline in fees is attributed to the increased use of Layer 2 scaling solutions and the adoption of blob transactions introduced with the Dencun hard fork. As Ethereum becomes more inflationary due to lower burns, managing the supply and inflation will be crucial. The recent launch of Ethereum ETFs has also brought new complexities to the ecosystem, with significant inflows seen in the market. With these developments, the Ethereum ecosystem is seen to be in a positive position with new capital flowing in.
