The Ethereum ecosystem is currently experiencing a significant drop in gas fees, impacting both mainnet and Layer 2 transactions. According to Etherscan Gas Tracker, the average gas fee on the mainnet is currently at 4 Gwei, or approximately $0.21. However, transactions can be processed for as low as 3 Gwei, or around $0.14. This decline also extends to Layer 2 solutions such as Optimism, Base, Arbitrum, and Linea, whose fees are below $0.01 per Gasfees.io data.
Market observers attribute the fee decline to the increased usage of Layer 2 scaling solutions and the adoption of blob transactions introduced with the Dencun hard fork in March. These upgrades have contributed to lower transaction costs on Layer 2 networks and have had a significant impact on the network. However, as a result of the lower 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%, according to data from ultrasound.money. Over 60,000 ETH was added to the network in the last 30 days.
OKX Ventures has noted that this trend continues a pattern observed in the second quarter when a 66.7% drop in the burn rate affected ETH’s supply-demand balance. The firm emphasized the importance of managing Ethereum’s supply and inflation as network activity slows and burns decrease. Additionally, analysts have pointed out that the recent launch of Ethereum exchange-traded funds (ETFs) adds further complexity to the Ethereum ecosystem. The SEC recently 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 this was offset by a roughly $1.5 billion outflow from Grayscale’s ETHE. Crypto analyst Koffi views these trends as positive, stating that the Ethereum ecosystem is affordable for end users and there is new capital flowing into the system. Overall, the Ethereum ecosystem is currently experiencing a historic drop in gas fees, leading to lower transaction costs and a shift towards an inflationary supply model. The recent launch of Ethereum ETFs adds further complexity to the network but also indicates positive growth and capital inflows.
