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Sujit Kumar
Aug 12, 2024
by Sujit Kumar

Ethereum Gas Fees Hit Five-Year Low Amid L2 Surge and Dencun Upgrade

Ethereum Gas Fees Hit Five-Year Low

Table of contents

  1. Impact of the Dencun Upgrade
    1. Gnosis Co-Founder Weighs In
    2. Ethereum L2s Outperform L1
The cost of sending an Ethereum (ETH) transaction has significantly decreased, reflecting reduced traffic on the network. The median price for an Ethereum transaction has dropped to just 1.9 gwei, with low-priority transactions falling to around one gwei or even lower. This decline marks a five-year low, coinciding with a surge in activity on Layer-2 (L2) networks.

Impact of the Dencun Upgrade

The sharp drop in gas fees follows Ethereum’s Dencun upgrade in March, which introduced several Ethereum Improvement Proposals (EIPs). One key proposal involved proto-danksharding, designed to reduce transaction costs on L2 blockchains. Since the upgrade, Ethereum’s gas fees have seen a dramatic 98% decrease from a year-to-date high of 83.1 gwei in March.

As Ethereum focuses more on scaling L2s, which handle transactions more efficiently and cheaply, the Layer-1 (L1) blockchain is still used for transaction verification. This shift has contributed to lower gas fees, even as L2 activity continues to rise.

Gnosis Co-Founder Weighs In

Gnosis co-founder Martin Köppelmann commented on the low Ethereum gas fees, suggesting that the network needs to increase L1 activity to maintain staking rewards. He noted that a gas fee of at least 23.9 gwei is required to support these payouts. Despite the current low rates, Köppelmann suggested that raising the gas limit could be a strategic move to boost L1 activity.

Ethereum L2s Outperform L1

L2 platforms like Arbitrum and Taiko have seen significant activity, with a combined 97 million transactions over the past 30 days. Meanwhile, Ethereum's L1 network recorded only 33 million transactions during the same period. This shift towards L2 solutions has led to less ETH being used for transactions and staking payouts, causing the supply to grow. In the last seven days, approximately 13,400 ETH worth $34.1 million has been added to Ethereum’s supply.

Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
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Ethereum Gas Fees Hit Five-Year Low
Ethereum Gas Fees Hit Five-Year Low Amid L2 Surge and Dencun Upgrade
Sujit Kumar
Sujit received his Bachelors in Science from the LNMU Darbhanga. He is currently working as a Content Strategist. He has more than three years of professional experience in information systems, security policies, technologies, and Cryptocurrency. He has published 6 books in the area of information security and assurance. He has published more than 50 research articles in leading journals Regarding the Latest and Breaking Crypto News and updates. His research interests include access control, computer forensics, Digital Marketing, Web development, business hacks, player experience, and virtual storytelling.

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