Ethereum is known for its high gas fees, which have been a significant roadblock to mainstream adoption. Yet, Ethereum gas prices have dropped to all-time lows in recent days, with the average Ethereum gas price reaching 8.8 gwei this week, surpassing the previous record low of 8.9 gwei set in January 2020, according to Etherscan data.
Gwei, short for gigawei, refers to the denomination used to calculate gas fees on the Ethereum network. One gwei is equal to 0.000000001 ETH.
One reason for lower costs is increased usage of layer 2 scaling solutions like Optimism and Arbitrum, which reduce congestion on the main Ethereum chain by processing transactions off-chain.
Ethereum’s scaling solutions have seen a surge in both adoption and value. The total value locked (TVL) in L2 networks has soared to $10.5 billion, more than double from the previous year, according to L2Beat data. In contrast, Ethereum’s TVL has experienced a drop of over 30% in the past year, settling at $20 billion.
Additionally, transaction volumes and active users on Ethereum have dropped over the past year as the broader crypto market has slumped. This lower demand for block space reduces competition for transactions, allowing fees to drop.
Ethereum’s average weekly transactions are down nearly 20% over the last year, while the weekly average number of active Ethereum addresses is also down more than 20%, according to IntoTheBlock data.
