Crypto: Gas Fees Plummeting on Ethereum!
Gas fees on the Ethereum mainnet recently hit their lowest level in over four years! Dropping below 1 Gwei, before slightly increasing again. This significant drop in fees has been mainly attributed to the rise in transactions on Ethereum’s layer 2 networks. While this fee reduction has made on-chain transactions much less expensive for crypto users, it has also sparked discussions about its long-term effects on Ethereum’s supply dynamics.
Crypto: impact of gas fee reduction
The reduction in gas fees has led to an increase in ETH supply, as less ETH is burned. According to data, only 120 ETH were burned in the last day, while the supply increased by more than 2,500 ETH. This situation creates an imbalance that could reverse the deflationary trend previously observed on the crypto network.
Layer 2 scaling solutions, such as Optimism, Base, Arbitrum, and Linea, have seen their average fees drop below $0.01. These networks now handle more crypto transactions per second than the Ethereum mainnet. For instance, Base managed 39.80 transactions per second (TPS) and Arbitrum 17.28 TPS, compared to approximately 12.17 TPS for Ethereum.
Ethereum facing inflation challenges
The drop in gas fees, while beneficial for crypto users, poses challenges regarding network inflation. With less ETH being burned, the total ETH supply increases, which could potentially dilute the value of ETH in the long run. Some market observers suggest increasing layer 1 activity to counter this trend and propose raising the gas limit, even with low fees, to stimulate base layer usage.
The recent drop in gas fees on the Ethereum network has significant implications for supply dynamics and network inflation. While it makes transactions more affordable for users, it also raises concerns about the increasing ETH supply and its potential effects on the long-term value of the crypto. It will be crucial to monitor these trends and adjust strategies accordingly to maintain a healthy balance on the Ethereum network.
Maximize your Cointribune experience with our "Read to Earn" program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
Le monde évolue et l'adaptation est la meilleure arme pour survivre dans cet univers ondoyant. Community manager crypto à la base, je m'intéresse à tout ce qui touche de près ou de loin à la blockchain et ses dérivés. Dans l'optique de partager mon expérience et de faire connaître un domaine qui me passionne, rien de mieux que de rédiger des articles informatifs et décontractés à la fois.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.