Ethereum Transaction Fees Drop to September Levels

The daily volume of transaction fees generated in the network of the second-largest cryptocurrency by market capitalization has fallen to levels last seen in September 2024.

In February, the figure dropped below $1 million for the first time in five months, reaching $731,472.

Similarly low values were observed last year from August 17 to September 8, and before that in November 2020.

The chart below illustrates the stagnating transaction activity in the main network:

Since April 2024, Ethereum’s supply has shown steady growth, ending the deflationary period that began after the activation of The Merge. Amid reduced on-chain activity, the supply of ether has already surpassed the levels of September 2022.

The Merge marked the complete abandonment of energy-intensive mining on the Proof-of-Work algorithm and the successful transition to Proof-of-Stake.

In August 2021, the London hard fork was implemented. This upgrade included several Ethereum Improvement Proposals, the most significant being EIP-1559. It involves burning a portion of transaction fees depending on network load and reducing gas price volatility. With high on-chain network activity, the amount of “destroyed” ETH can exceed the number of newly issued coins, making the asset deflationary.

What About L2?

Promoted by Vitalik Buterin, the scaling strategy through L2 solutions has reduced the load on Ethereum and partially eliminated sharp gas price spikes.

However, many developers express concerns about interoperability issues and, consequently, potential ecosystem fragmentation.

Even after the Dencun update and scalability improvements through a new transaction type for large binary data arrays (BLOB), activity is increasingly shifting to L2, weakening the base layer, analysts at JPMorgan claim.

Against this backdrop, competitors like Solana, Tron, and Base continue to gain popularity.

Back in a previous report, developer Justin Drake called Ethereum “ultra-sound money” as opposed to “obsolete” Bitcoin.