Over the past few weeks, Ethereum has seen its average transaction charges plummeting. Keep in mind that this happens amid the increasing demand for DeFi products. According to Glassnode data, the ETH average charges are on a five-month low, reaching $3.95 on a 7-d Moving Average.
Referred to gas fees, these are charges that users incur when utilizing blockchain networks to process crypto transactions. On the ETH network, miners incur the cost under the existing PoW (Proof-of-Work model. Moreover, congestion on the ETH network skyrocketed the network’s charges with time.
Meanwhile, according to a chart by Glassnode analyzing transaction prices in 2021, ETH has gas pays at about $3 early this year. However, the fees surged drastically to $10 by mid-January. That came as the market witnessed a massive bullish outlook, most crypto coins achieving their record high in April. The average ETH gas charge amplified to $45, its peak, as Ether traded at over $3,800, its record high.
Since hitting its highest, ETH gas fee has seen significant declines, hitting a three-month low in April.
Proposed Future Updates Might Reduce Fees
The ETH’s future EIP 1559 renovation, scheduled to launch in July, would introduce remarkable changes to the network’s fee mechanism. According to the current price model, users pay a base fee for their transactions depending on the suggested gas charges based on their activities on their system at that particular time.
After the EIP 1559 upgrade, the network will use the protocol to calculate the fees paid by users. This model will translate to lower charges as the block capacity would be in an average mark, averting congestion impacts.
Ethereum, the leading alternative coin, is questionably the most utilize blockchain network. However, the platform has witnessed increased competition. Moreover, its loyal fans are now opting for platforms with favorable prices like Tezos, Solana, and Binance Smart Chain, among others. To survive in today’s ever-expanding financial market, ETH plans to sort the challenges either via its upcoming PoS (Proof-of-Stake) model, labeled as ETH 2.0, or the EIP 1559 upgrade.
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