A slowdown in blockchain activity has led to a drastic reduction in the average transaction fee on the Ethereum blockchain.

According to a report from Binance Research, the average ETH transaction fee was $2.61 in the third quarter – down 79.1% from an average fee of $12.50 in Q2. 

“This is indicative of a decline in blockspace demand as a result of reduced activity on Ethereum,” stated the report.

Blockchain market intelligence platform Santiment noted the slowdown in activity in a Twitter update on Thursday. 

“Ethereum’s active addresses have sunk to 4-month lows with weak hands continuing to drop post-merge, and disinterest at a high as prices have stagnated. Monday was the first day that there were less than 400k addresses on the network since June 26th,” stated Santiment.

The overall decrease in network activity comes despite a recent increase in annualized staking rewards, which would seem to indicate an uptick in network activity. 

The Block reported on Thursday that leveraged stakers were earning APRs as high as 11% caused mainly by activity from maximal extractable value (MEV) bots.

Ethereum wasn’t the only blockchain that saw a decrease in network activity over the last quarter. Binance noted that active addresses on BNB Chain declined 33% and activity on Avalanche declined 23% over the last quarter.           

The report also noted a significant decline in the total value locked in DeFi protocols and overall market cap of cryptocurrencies over the quarter. The number of coins with a market cap of over $1 billion fell from 62 to 51 in Q3.