Median gas prices on Ethereum have dropped to their lowest level in years despite soaring network activity. Data from Dune compiled by @hildobby shows that mainnet gas prices dropped below three gwei on Friday for the first time since early 2020.
Gas prices are the cost to conduct a transaction on Ethereum. In dollar terms, the drop in gas prices equates to performing a swap on Uniswap for $1.06, trading an NFT on Seaport for $1.49 and transferring ETH on chain for $0.23, according to data from GasFees.io. When transacting on a layer 2 network like Base, which incorporates “blob” transactions, fee levels are reduced even further. A Uniswap swap on Base costs $0.0016 in fees, a Seaport trade costs $0.0021 and an ether transfer costs $0.00026.
According to Pistachio.fi founder Brian Smocovich, the lower levels of fees on the network are not the result of a slowdown in transaction activity, but rather, the effect of a more efficient fee market.
“Ethereum volume per day is the same if not higher than 6 months ago. L1 [layer 1] fee market is now more efficient because of L2 [layer 2] volume and EIP-4844,” said Smocovich on X.
“The L1 gas market is now more efficient because most volume is on L2s, L2 -> L1 settlement is 100x cheaper than pre-4844, and we have the gas market efficiencies of EIP-1559,” he added.
He noted that gas is at “rock bottom” while network activity is at an all-time high, citing data from L2Beat which shows that layer 1 and layer 2 protocols recorded an average of 299 transactions per second on June 21.
The flip side to gas fees sinking is how it impacts the supply dynamics of the network, specifically, Ethereum’s burn rate which is now at a 12-month low.
EIP-1559, introduced via the London hard fork, introduced a base fee tied to usage that would be burned or removed from supply. With a lower amount of fees to burn, ether’s supply has turned slightly inflationary and sits at a growth rate of around 0.56% a year, according to ultrasound.money.
