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- Ethereum has printed its lowest transaction fees for the year.
- The protocol has been recording massive transaction counts without congestion struggle.
Ethereum transaction fees have reached their lowest levels since December in terms of usage. Just this weekend, the cost of executing transactions on the world’s largest programmable blockchain and the parent platform of the world’s second-largest cryptocurrency Ethereum (ETH), has dropped to 1,719 ETH which is valued at approximately $2.8 million.
According to historical data from South Korea-based blockchain analytics firm CryptoQuant, this is the lowest single-day total since December 26th. Compared to the year-to-date high of 16,720 Ethereum reported on May 5th, the figure shows a massive plunge of 89%.
Unlike leading digital asset Bitcoin (BTC) which uses a Proof-of-Work (PoW) consensus mechanism, Ethereum leverages a Proof-of-Stake (PoS) algorithm that uses validators instead of miners to create and verify a new block for transactions. These validators help secure the network by staking at least 32 ETH each.
Usually, they receive a portion of the transaction fees; validators get either the priority fee or the tip that users sometimes add to the base fee to entice validators so that they prioritize their transactions.
The primary base fee is burned to help reduce the Ethereum circulating supply. Markedly, the significant decline in total daily fee is evidence of low network usage. This is because fees are usually dependent on the amount of activity happening on the network, especially the number of pending transactions.
There are speculations that these new fees may be as a result of the growing popularity of the ETH Layer-2 scaling solutions which is a long-term positive development for the network.
Utilization of Ethereum Layer-2 Scaling Solutions
David Lawant, head of research at FalconX, pointed out that ETH Layer-1 fees have gone down by 25% compared to the average of the year since Friends.tech launched on Base on August 10th. Furthermore, he acknowledged that the decline is in sharp contrast to the times when the success of early Non-fungible token (NFT) application CryptoKitties or the latest Yuga Labs NFT drop would commonly temporarily clog the Ethereum network.
Lawant appreciated how the app was able to successfully gain meaningful traction without impacting any congestion on the underlying network. This milestone came on the heels of the latest development of ETH L2 swing solutions. Specifically, Friend.tech was designed on top of Coinbase Base which utilizes the Optimism Stack.
Generally, L2 scaling solutions like Optimism, Arbitrum and Base are crucial to scaling Ethereum.
In the process, it reduces the potential of congestion and helps keep transaction cost on the main network under control. IntoTheBlock data shows that number of daily transactions on Optimism Mainnet hit a new All-Time High (ATH) of almost 900,000 transactions on August 15th.
“As competition between L2s grows, it becomes clear that Ethereum benefits,” IntoTheBlock added. Meanwhile, Ethereum is currently trading at $1,645.92, having gained 0.40% in the past 24 hours per data from Marketcap.
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