As a seasoned crypto investor with years of experience under my belt, I find myself intrigued by the current state of Ethereum. The recent drop in gas prices and transaction fees to all-time lows is indeed impressive and indicative of a healthier network for everyday users. However, as EgyHash rightly points out, this could pose challenges for us investors in the long run.
As an analyst, I’ve observed that the average daily gas price for Ethereum has hit a record low of approximately 2.9 Gwei. This decrease in gas prices is mirrored by a substantial decline in daily transaction fees, which are now averaging just $0.85. This represents a significant low point for the network over the past few years.
The analyst reported that this cost reduction comes amid a stable or slightly increasing daily transaction volume compared to the past two years, suggesting that lower fees haven’t deterred user activity on the network.
Even with significantly lower expenses, a consistent volume of transactions suggests a robust network’s vitality and ongoing user involvement. This remains the case as financial obstacles become less prevalent.
Reason Behind The Plunge In Transaction Costs
Exploring why Ethereum transaction fees have hit record lows lately, the analyst ‘EgyHash’ from CryptoQuant suggested that it could be due to the Denmei (Dencun in English) update carried out on March 13th of this year.
In this update, we’ve unveiled ‘Blobs’, a new type of transaction tailored for Layer 2 networks on Ethereum. Networks like Arbitrum, Base, and Optimism can now publish their data on Ethereum at significantly lower costs, possibly reducing expenses by as much as 100%.
The upgrade to this system has significantly reduced gas prices, making Ethereum a more user-friendly platform for a wider audience, as revealed by the analyst.
#Ethereum Gas Price Hits New All-Time Low
“Although Ethereum ETFs have received approval, the value of Ether ($ETH) has been experiencing difficulties since the Dencun update. In fact, over 197,000 ETH have entered circulation, and as a result, its price has dropped by approximately 35%.” – By @EgyHashX’s assistant
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— CryptoQuant.com (@cryptoquant_com) August 19, 2024
However, EgyHash also highlighted that although lower transaction costs benefit users by making the network more affordable for various applications, they pose a nuanced challenge for investors. EgyHash noted in the post:
As an analyst, I recognize the appeal of low fees for users when it comes to Ethereum transactions. However, from an investor’s perspective, these low fees might not be entirely beneficial due to a significant portion of Ethereum’s usage shifting to its Layer 2 networks. This transition could potentially lead to issues such as user and liquidity fragmentation.
Ethereum Market Performance
To this point, ETH hasn’t been successful in keeping its value above significant price thresholds. Over the last seven days, there’s been a 4.2% drop in ETH, resulting in a bearish trend that has caused the asset to be trading at $2,591 as of now.
According to EgyHash, the challenge faced by Ethereum’s price in reaching new peaks has persisted from the Dencun update, and it hasn’t been eased even with the recent green light given for traditional Ethereum exchange-traded funds (ETFs).
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2024-08-20 08:10