The average transaction fee on Ethereum is $2.15, data from BitInfoCharts shows. This is the lowest average rate since December 20, 2020, when it was $2.00.
Transaction fees didn’t exceed $2 for most of 2020, but things took a turn as Bitcoin’s rally picked up this year, bringing Ethereum along for the ride.
ETH transaction fees hit $69.92 on May 12, the day after Ethereum hit its record $4,164. Another transient high came just a week later, when transaction fees rose to $59.57.
What does all this mean?
Rates are low because demand for Ethereum is down. The price of ETH is now around $1,800 and is slowly declining.
The same thing happened with Bitcoin’s average transaction fee, which dropped 24% overnight to reach $5.10. At $32,700, the price of Bitcoin is now about half of its April high. Bitcoin’s transaction fee is 330% higher than the same period last year, according to Ycharts.
To be clear, while low transaction fees are bad for miners and can indicate low demand for the network, they are good for anyone processing complicated transactions through decentralized Ethereum-based financial protocols like Uniswap or Synthetix.
Fees may decrease further after the arrival of Ethereum 2.0. Upgrading to the Ethereum blockchain may take years before it’s fully implemented, but it promises faster, cheaper transactions and much cleaner mining.
This is in part because the network will move from the proof of work consensus mechanism, which requires powerful hardware to validate transactions, to proof of participation, where those who allocate more ETH validate transactions.
A successful update can help Ethereum stage a powerful comeback. But if demand heats up, rates could rise again.
*Translated and edited by permission of Decrypt.co