Ethereum Transaction Fees Hit All-Time Low as Layer 2 Networks Divert Activity

The average transaction fee on ethereum has hit all-time lows as more activity moves to the chain's Layer 2 (L2) networks.

According to Ultrasound.money dataaverage gas fell to 4.81 Gwei, the lowest level since the network completed the Merge event in 2022.

Market observers attributed this decline to increased activity on L2 networks following the completion of the Dencun upgrade. The Dencun upgrade significantly reduced fees for L2 networks, making transactions at the base layer less attractive.

In particular, the blockchain analytics platform IntoTheBlock twitter.com/intotheblock/status/1788963190115553708″>reported:

“An increasing number of transactions are now settling on ethereum Layer 2. Last month, the three largest L2s reached a record 82% share of all ethereum transactions.”

Furthermore, the number of transactions on Arbitrum has experienced strong growth, reaching more than 2 million daily transactions on May 8, a significant increase from the average of 1 million in early March.

L2beats data It further indicates that Base and Arbitrum averaged 30 and 20 transactions per second, respectively, while ethereum handled 13 transactions per second during the same period.

eth becomes inflationary

Meanwhile, CryptoQuant analysis revealed that eth has moved into an inflationary state after the Dencun upgrade, resulting in a decrease in gas fees and a reduction in its consumption rate.

In light of this development, the firm noted:

“Since The Merge, ethereum seemed to be on track with its 'ultrasound' monetary narrative, showing a slight reduction in the total supply of eth. However, the post-Dencun upgrade challenges this by reducing transaction fees and the consumption rate of eth, leading to an increase in supply.”

CryptoQuant further explained that the Dencun upgrade environment has presented a scenario where maintaining deflation would require a substantial increase in network activity, in contrast to the current trend of low gas tariffs and reduced consumption rates.

Notably, data from UltraSound.Money shows that the daily amount of eth burned over the previous day was 519 eth, an all-time low for the network.