Transaction costs on the Ethereum blockchain have dropped to a five-year low following a slow down in transaction volumes. Ethereum network fees are now $0.168 as fewer people send Ether through the blockchain or interact with smart contracts, as per an X post by market intelligence platform, Santiment.
Santiment director Brian Quinliven discussed the issue through a blog post on April 17th.
“When many people are using Ethereum, users bid higher fees to get their transactions confirmed faster. This drives the average costs up. When fewer people are transacting, as we see now, users don’t need to bid much. As a result, the average fee drops. It’s essentially a supply & demand system,” wrote Quinliven.
He went on to write more about the current status of Ethereum and its standing when compared to other coins like XRP and Cardano.
“Overall, Ethereum has been largely written off by the crowd. Several traders have given it a meme status as other top caps (like XRP & Cardano) enjoyed major breakouts themselves over the past year,”
Ethereum remains the second-largest cryptocurrency by market capitalization. At the time of reporting, Ethereum’s price is recorded at $1601.95 as per CoinMarketCap.
Pectra upgrade and its features
The Pectra upgrade is scheduled for May 7th. It is expected to bring a lot of developments for Ethereum’s blockchain, such as reduced congestion on the network and lower transaction fees. Other key benefits include an increase in maximum staking limit from 32 ETH to 2048 ETH and payment of fees in USDC.
The second phase of Pectra will go live in late 2025 or early 2026, introducing a newer data structure that improves data storage efficiency and scalability.
The Duncan upgrade in 2024 slashed transaction fees for layer two networks.
