There has been a real collapse in the average cost of fees on transactions recorded on the Ethereum blockchain in recent days.
Big drop for fees on the Ethereum network
After peaking at over $60 in November, the average daily cost per transaction had already dropped to $6 in March, with an initial 90% reduction. But it has fallen again since then.
On 2 July, it fell as low as below $1.7, which is a further -70% from the March lows, meaning that compared to the November highs the drop is now more than 97%.
Even more significant is the drop in median cost, which better represents the situation for most Ethereum users.
In fact, the November high of the median daily transaction cost on Ethereum’s blockchain was just over $34, while on 2 July it had collapsed below $0.7, a 98% drop from the November highs.
This collapse is obviously due to the sharp decline in the number of transactions recorded daily on the Ethereum blockchain, resulting in a sharp reduction in the queue of transactions waiting to be recorded.
While at the end of October 2021 there was even a peak at more than 1.5 million transactions recorded in a single day, by January it had already fallen below 1.1 million, and in March it hit a low just above 1 million.
Starting on 22 June it dropped below 1 million, with a return above this threshold only starting on the 29th of the same month.
This sharp reduction in the daily number of transactions emptied the queue of pending ones, causing the fees required to get one approved to plummet.
Activity recorded on Ethereum’s blockchain
It is worth noting that the minimum peak of daily transactions recorded in June is in line with the average number of daily transactions recorded in June 2020, which was two years ago, even before the DeFi boom. At that time, the average fee cost was just over $0.4, a figure that is four times lower than it is today.
In light of the latest figure, it seems unlikely that the reduction in fees is due to the large-scale use of second-tier solutions, but seems mainly due to the reduction in transactions queued up to be registered on the blockchain.
In fact, it is worth noting that as far as Bitcoin is concerned, the increasing use of LN has reduced the median daily fees to $0.4, while Ethereum’s fees are still above $1, after the minimum level on 2 July. This is despite the fact that the average daily number of transactions recorded on Bitcoin’s blockchain has been roughly constant over the past 12 months.
So while the drop in fees on Ethereum seems to be due more to a reduction in transactions than to the use of second-layer solutions, the exact opposite seems to apply to Bitcoin.