Ethereum (ETH) has recently seen a significant drop in gas fees, reaching its lowest average since November 2016. On June 30, the average gas fee plummeted to just 3 Gwei, equivalent to $0.14, with nine of the 10 cheapest hours for gas fees occurring last week.
Gas fees are crucial for the Ethereum network as they cover the costs of operations, ensure network security, and deter spam attacks. Analysts attribute the fee drop to improved efficiency in the layer-1 (L1) market, driven by increased layer-2 (L2) volume and the introduction of “blob transactions” through EIP-4844, enhancing Ethereum’s scalability.
A year ago, median gas prices were between 15 to 20 Gwei, but have significantly decreased since then. Peak gas prices reached 83 Gwei in March 2024 but have steadily declined following the Dencun upgrade on March 13. This drop in gas fees is seen as a positive sign for Ethereum’s L2 networks, reducing transaction costs and making the network more accessible.
Lower gas fees are important as they make the network more accessible to a wider audience, encouraging more users and developers to engage with Ethereum-based applications and services. This increased adoption helps solidify Ethereum’s position in the blockchain ecosystem, while maintaining network security and functionality without excluding smaller participants. The democratization of access also fosters innovation and ensures that the benefits of blockchain technology are widely distributed. Additionally, lower gas fees can stimulate activity in sectors like decentralized finance and NFTs, which were previously hindered by high transaction costs.