There is no other way to put it, Ethereum gas fees have been insanely high for the past couple of months. Basically, there is so much demand for the ERC20 network that it was in a constant bottleneck situation. With no Ethereum 2.0 in sight, the Ethereum gas fees continued on to disappoint investors and encourage the competitors. And finally, Vitalik is putting a leash on the rabid gas fees as they drop to a 6-month low. Frankly, the results are still pretty rough considering other networks, but at least they’re better!
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Ethereum Gas Fees Back from the Moon
Honestly, none of us investors would choose ERC20 unless we had to. Just a few months ago, the network fees were at an all-time high of $52 per transaction. Essentially, for some use cases ERC20 is the only option since way too many altcoins are Ethereum based. So, the $52 fee would essentially put a big dent on your assets. And of course, minting an NFT would pretty much cost you two Costco executive memberships.
Thankfully, the Ethereum gas fees are now considerably lower as of late February. At this point, the average size fees revolve around 0.0039 ETH or $10.26 per transfer.
In the meantime, the layer two transactions have also declined during this past week. Essentially, these L2 transactions were saving the network with clever solutions. The layer 2 networks are a lot cheaper and scalable.
Loopring is currently the cheapest L2 followed by ZKSync, Polygon Hermez and Arbitrum One. The fees for both leveraging and swapping tokens on these L2 solutions are well below $1.
But Why?
What has the network done to decrease Ethereum gas fees? To be honest, Ethereum hasn’t done anything to reduce the load on the network. There is supposed to be an Algorand fork coming this year but that is for another day. Since the ERC20 network has not made any effort to handle transactions faster or cheaper, the reduced load indicates bad news for ETH.
For the moment, there is no official justification for the reduced gas fees but one thing is for sure. There is less traffic on the network which could indicate less demand. Either, there is an increased layer two activity or investors are moving on to other networks. Furthermore, in a report by decrypt, NFT sales have plummeted recently and that is another contributing factor. Either way, despite the seemingly good news, this drop in network activity should be alarming for Ethereum and push them to rush Ethereum 2.0 upgrade.
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