Recent data shows that Ethereum’s base gas fees have dropped to an all-time low of just 0.8 gwei. With this new development, the network has reached a major milestone in its efforts to speed up transactions and lower user costs.
Gas fees are an important part of the Ethereum network because they’re what users pay to do business on the blockchain. In addition to ensuring network safety and preventing spam, these fees play a crucial role in prioritizing transactions during periods of high demand.
While users can opt for higher fees to expedite their transactions, the network only approves transactions with the base gas fee as the minimum requirement.
Ethereum Gas Fluctuations
In the past, Ethereum’s gas fees have been very unstable because demand for the network’s services has been going up and down. The average gas fee skyrocketed to a huge $196 in May 2022, when it was at its highest point. This shows how challenging it is to make the network bigger to handle more users.
The new Dencun update, on the other hand, has changed everything. This update added “blobs,” a new feature that is meant to make the network more scalable by making transfers faster and cheaper. As a result, gas fees have slowly gone down, which goes against the deflationary story that Ethereum supporters used to push.
The drop in gas fees has made people worry about Ethereum’s long-term economic plan, even though it has made transactions cheaper. According to Ultra Sound Money data, only 7,729 ETH tokens were burned last week, but 18,064 new tokens were created during that time. This trend shows that pricing pressure is rising on the network.
Fidelity experts have expressed these concerns, pointing out that the Ethereum blockchain experienced the highest inflation in the second quarter of this year. The network may see more expensive quarters in the future, complicating its economy.
Martin Köppelmann, co-founder of Gnosis, an Ethereum sidechain that focuses on privacy, spoke out about the issue. He stated that maintaining network stability and balancing staking payouts would require a 23.9 gwei base fee. He said:
“Ethereum needs to get more Layer 1 activity again, and even if it sounds counterintuitive at such low rates, raising the gas limit can be part of a strategy.”
