As an experienced analyst, I believe that the current state of Ethereum’s gas fees is a significant development for the network. The drastic drop in fees to their lowest levels since 2016 is a clear sign of improved efficiency and scalability within the Ethereum ecosystem. This can be attributed to the combination of Layer-2 solutions and the recent introduction of EIP-4844, which has boosted the network’s capacity to handle higher transaction volumes without incurring exorbitant fees.
On June 30th, Ethereum network fees reached a low not seen since 2016. As indicated by data from Etherscan and Dune Analytics, the average gas fee at present hovers around 3 Gwei or roughly $0.14.
As a researcher studying the Ethereum blockchain, I can explain that gas fees represent the expenses incurred for executing different transactions or operations on the Ethereum network. By covering these fees, users contribute to maintaining the network’s security. Additionally, gas fees serve as a protective measure against potential spam attacks by setting a price threshold for each transaction, thereby discouraging unwanted and excessive activity.
As an analyst, I observed that during the 2021 bull run, Ethereum’s gas fees reached unprecedented levels due to intense demand within the non-fungible token (NFT) sector. This situation led some industry experts to question the long-term sustainability of the network and paved the way for more cost-effective alternatives like Solana to gain traction.
Currently, Ethereum gas fees are surprisingly low, even though the network is handling a significant amount of transaction activity. Remarkably, the trading volume for Ethereum is currently comparable to what we saw at the start of the year.
The substantial decrease in fees can be attributed to the enhanced efficiency of Ethereum’s Layer-1 market, resulting from the increased volume of Layer-2 solutions and the integration of “blob transactions” with EIP-4844. This combination has considerably improved Ethereum’s scalability.
In simpler terms, Brian Smocovich of Pistachio Fi explained on X social media that although there will continue to be periods of higher gas usage resulting in prices above 15 gwei, overall the Ethereum gas market has become more efficient since block number 4844. Consequently, we can anticipate more affordable days compared to costly ones.
Back to inflation
With significantly reduced fees, Ethereum now operates as an inflationary network instead of deflationary, due to minimal fee amounts burnt during transactions. Contradicting previous claims advocating Ethereum as an “ultrasound money” before the London upgrade.
Based on the data I’ve analyzed from ultrasound.money over the last week, approximately 14,393 Ether tokens have been added to the Ethereum network, resulting in an annualized growth rate of around 0.62%.
As a crypto investor, I can tell you that the current total supply of Ethereum amounts to 120,185,061 ETH. Given this figure, Ethereum is projected to reach a new peak in 2024.
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2024-06-30 13:10