The cheap network fees are a boon for traders but could signal long-term fundamental issues with Ethereum’s revenue generation model.
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Gas fees on the Ethereum layer-1 blockchain dropped to just 0.067 Gwei on Sunday, amid a lull in the crypto markets sparked by October’s historic market crash.
The average price for executing a swap on Ethereum is just $0.11, (NFT) sales carry a fee of $0.19, network will cost users $0.04, and onchain borrowing costs $0.09 at the time of this writing, according to .
Ethereum hit a recent high of 15.9 Gwei on October 10, the day of the that caused some altcoins to shed over 90% of their value within 24 hours.
However, by October 12, fees dropped back down to just 0.5 Gwei and mostly remained well below 1 throughout October and November.
Investors and traders may take advantage of the low transaction fees to execute onchain transactions on the base layer. However, analysts and crypto industry executives warn that the excessively low fees might spell trouble for the Ethereum ecosystem.
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During the 2021 bull run, transaction fees on the Ethereum layer-1 could cost users $150 or more during times of network congestion.
However, following the Ethereum Dencun upgrade in March 2024, which lowered transaction fees for Ethereum’s layer-2 scaling networks, fees contracted significantly, causing Ethereum’s .
Critics say the for any blockchain network and present both financial and security challenges due to the lack of revenue to incentivize validators or miners to process transactions and secure the blockchain.
Because fees are responsive to user demand, low fees and revenues could also signal that users are moving away from a particular blockchain network.
Ethereum, in particular, has chosen a scaling strategy that relies on an ecosystem of separate layer-2 networks, which , according to research from crypto exchange Binance.
While layer-2 networks allow Ethereum to scale and compete with newer, high-throughput chains, the Layer-2 networks are also cannibalizing revenue from the base layer, creating additional competition for Ethereum within its own ecosystem.
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