Ethereum Fees Reach 50 Cent – Trustnodes

Network demand remains high however with more than one million transactions a day paying just 50 cent in network fees.

That’s the lowest since July 2020, with this being the first time in nearly two years where using the ethereum network costs you almost nothing, in contrast to last May when fees reached $70 per transaction as seen above.

The rise of second layers (L2) may be one reason for this drop in fees to usable levels. They’re growing in popularity with 2.23 million eth, worth $6 billion, now transacting on Arbitrum and other L2s.

The gas limit has also doubled from 15 million per block to 30 million starting last August, increasing network capacity while lowering fees.

The main reason however is probably because there aren’t as many farming airdrops or NFT mintings clogging up the network.

Also it may be that the fee burning mechanism reduces network spam, from miners especially but also other actors, because all fees no longer go to miners as the majority is now taken out of circulation.

The return of fees to a normal level still means 2,500 eth has been burned in the past 24 hours.

If eth was operating under full Proof of Stake, that would mean 1,000 eth being taken out of the supply every day as the daily staking reward is about 1,400 eth a day.

Even at these fee levels therefore, about 100,000 eth would be taken out of the total supply every quarter.

That’s worth $250 million at current price, or about $1 billion a year, taken out of supply and thus effectively amounting to new demand.

At higher base fee levels, either due to wider adoption of L2s or because stakers increase capacity further, that can easily reach one million eth a quarter, or about 1% of the total supply, being taken out of circulation every three months.

Even at these levels however, ethereum’s yearly inflation rate will be at about -0.5% a year starting this summer.