The second-most popular blockchain network recently reached a significant low in its transaction fees. The average gas fees on the Ethereum network dropped by almost 87% within five days. Between May 12-17, transaction costs plummeted from an average of $32 to less than $6, according to data from bitinfocharts.com.
The last time transaction fees dropped so low on the Ethereum blockchain was in July 2021. The average fees on the network declined to as low as $3 then.
Ethereum is the most used blockchain network in the crypto space. Its support for smart contracts and decentralized applications has given the network more adoption than the Bitcoin network. However, users have constantly been plagued with high transaction fees, which has stirred several negative comments about the network.
Why Gas Fees Tanked on the Ethereum Network
The recent dip in prices the crypto market experienced has led to a decrease in the value of almost all crypto assets. In less than a month, Ethereum fell from above $3000 to below $2000. The value decline has contributed to the lower transaction fees.
Bearish market conditions have also resulted in a decline in NFT sales in the last few days. The fear and greed indicator also reveals that investors are currently in extreme fear. The index has reached its lowest value in more than two years (9%). Crypto and DeFi investors are pulling out of Ethereum and other similar crypto assets.
Additionally, the birth of alternative blockchains like the Avalanche blockchain and the Solana blockchain has resulted in Ethereum having multiple “competitors.” These alternative blockchain networks process transactions faster and with lower fees. On the Solana network, gas fees hardly ever exceed $0.01. This is more than 500x cheaper than the Ethereum network, even at its lowest gas cost.
Although the ETH network is working towards launching ETH 2.0, a faster and cheaper blockchain based on the proof-of-stake framework, ETH fees will remain a scare for many blockchain users until the plague is fixed.
