Ethereum (ETH) transaction fees have dropped to their lowest levels since 2022, a significant milestone for the second-largest cryptocurrency by market capitalization.
according to According to an analysis by Messari founder and CEO Ryan Selkis, the average fee to transfer ETH is $1.83, while the cost of purchasing the token through Uniswap is about $4.17.
The decrease in gas fees can be attributed to reduced on-chain activity related to non-fungible token (NFT) sales, memecoin trading, and Telegram bots.
Reduced gas fees and on-chain activity lead to increased Ethereum supply
The drop in gas fees caused Ethereum to enter a period of inflation. Ethereum’s supply increased by 4,092 ETH tokens over the past week, with a total value of approximately $6.6 million.
Ethereum experienced a surge in on-chain activity in early 2023, driven by NFT transaction volume and buzz surrounding the Blur token airdrop. Since then, however, activity has died down.
Highlighting the current bearish sentiment in the market, Selkis said: “We are so deep into a bear market that ETH is experiencing inflation again.” This observation highlights the impact of reduced demand and transaction volume on Ethereum’s overall supply dynamics.
Analyze costs and gas usage Statistical data According to Messari, Ethereum recorded $2.24 million worth of fees in 24 hours, with an average fee of $2.59. The amount of gas used during the same period was 108,194,133,311, and the average gas limit was 124,856. The data provides insight into transaction volume and activity levels within the ETH network.
The impact of these developments on Ethereum is twofold. First, lower gas fees may benefit Ethereum users by lowering transaction costs and the cost of interacting with decentralized applications (dApps) based on the Ethereum blockchain. Lower fees can foster wider adoption and increased use of the network.
Second, the transition to an inflationary period highlights the importance of monitoring supply dynamics and market conditions.
As new tokens are issued and supply increases, this may impact Ethereum’s overall value proposition and its ability to maintain scarcity, a significant factor in its price growth.
Overall, Ethereum transaction fees have reached their lowest levels since 2002, largely due to reduced on-chain activity related to NFT sales, meme coin trading, and Telegram bots.
The drop in gas fees caused ETH to enter a period of inflation and its supply increased. Monitoring these developments is critical to understanding the performance of the network and the impact on Ethereum’s value proposition within the broader cryptocurrency market.
As of this writing, ETH is down more than 3% in the past 24 hours and is trading at $1,552. Furthermore, this downward trend has persisted across different time frames, with a 4.5% drop over the past seven days, a 5.5% drop over the 14-day period, and a 15% drop over the 30-day period.
Featured image from iStock, chart from TradingView.com