Ethereum Fees Drop 70% to Lowest in Four Years
The Most Important Points at a Glance
Ethereum transaction fees have dropped by 70%, reaching their lowest level in four years. The average gas fees are currently around 5 Gwei, which equates to approximately $0.80 per transaction. The main reasons for this decline are the increased use of Layer-2 solutions (L2) and reduced activity on the Ethereum blockchain.
Why Are Ethereum Fees Decreasing?
The Ethereum blockchain is one of the most widely used platforms for decentralized finance (DeFi) applications and NFTs. In the past, high network congestion led to rising transaction costs. Now, two key factors have emerged that explain the current fee reduction:
- The increased adoption of Layer-2 solutions such as Arbitrum, Optimism, and Base.
- A decline in network activity on the Ethereum mainnet blockchain.
The Impact of Layer-2 Solutions
Layer-2 networks alleviate Ethereum’s congestion by processing transactions off the main blockchain and only submitting final results to the mainnet. This technology significantly reduces network load and, consequently, transaction costs.
A major milestone was the Dencun upgrade, which introduced so-called “blobs,” drastically reducing data costs for L2 networks. Since then, fees on these networks have dropped by up to 90%. For example, a transaction on Arbitrum now costs only $0.15, compared to $2 previously.
The number of daily transactions on Layer-2 networks has increased from 800,000 to over 1.5 million within a year. This trend indicates that more users are turning to cost-effective alternatives.
Decline in Network Activity
In addition to the increased use of Layer-2 solutions, the Ethereum mainnet is experiencing a decline in transaction activity. The number of daily transactions fell from 1.2 million in January 2024 to approximately 900,000 in February 2025. Likewise, trading volume on decentralized exchanges (DEX) dropped from $5 billion to $2.62 billion per day.
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Another factor is the waning interest in speculative NFT projects and memecoins, which previously contributed to high network congestion. Additionally, the number of newly issued ETH currently exceeds burned coins by 197,000 ETH, equivalent to around $500 million. This further reduces fee pressure.
Outlook: What Does This Mean for Ethereum?
Lower transaction costs could make Ethereum more attractive for users and foster new applications. However, there is also a risk that liquidity could become too fragmented across various Layer-2 solutions, potentially affecting network efficiency.
Ethereum is increasingly evolving into a security and settlement layer, while everyday transactions take place on Layer-2 networks. Platforms like Base, which already have a Total Value Locked (TVL) of $8 billion, could further accelerate this trend.
Our Assessment
The decline in Ethereum transaction fees is a positive development for users and developers. Layer-2 solutions play a crucial role in scaling the network and reducing costs. At the same time, Ethereum must ensure that increasing liquidity fragmentation does not create new challenges. The coming months will reveal whether this trend stabilizes in the long term or if new market dynamics will drive fees higher again.
| Symbol | ETH |
| Coin type | Alt Coin |
| Transaction Speed | Medium |
| Pros |
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| Cons |
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| Further practical applications | |
| Price | $2,683.88 |
| 24h % | -1.90 % |
| 7d % | -1.19 % |
| 30d % | -17.45 % |
| 60d % | -21.43 % |
| 1y % | -8.76 % |
| Market Cap | $323,463,236,844.00 |
| Official Links | Website | Source Code |
| Socials | Reddit | X |
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