Ethereum network fees on Layer 2 protocols have dropped to their lowest point in seven months, following a decrease in ETH gas fees across the board.
As of early Monday, March 7th, the average price of transactions on the Ethereum network was 24 gwei, which is equal to approximately $1.26 USD. The figure was even lower during the weekend when the average gas price was recorded at 19 gwei, or less than $1, according to Gasprice.io.
Such Ethereum transaction costs have only been seen once before, in August 2021, where they hovered in a similar range for three months before undertaking a steep climb.
Network fees on Ethereum have been gradually decreasing since the closure of the first week of January 2022, now sitting 82.4% lower than during January’s highs, as of this writing.
Network Congestion Decreases
The Ethereum blockchain has been long criticized for its extremely high network fees, especially during network congestion.
Despite these issues, Ethereum is still one of the largest platforms, hosting hundreds of decentralized finance (DeFi) applications and Non-fungible tokens (NFTs), in fact, the hype for NFTs and DeFi were major contributing factors for why Ethereum gas fees reached record highs last year.
But as the general crypto space crested into the bear market, and possibly into a new crypto winter, investor interest and transaction volumes in both of these trending sectors began to shrink, leading in turn to both decreased congestion and gas fees on the Ethereum network.
Moving to PoS
The Ethereum network will make the transfer from the Proof of Work consensus mechanism to Proof of Stake in summer 2022, as confirmed by its founder Vitalik Buterin.
The transition is expected to make Ethereum 2.0 more scalable, thus drastically reducing transaction times and costs.
Despite the current decrease in value being experienced, Ethereum is still the biggest network in terms of the total value locked on its blockchain.
At the time of writing, the Ethereum blockchain holds $14.85 billion of value locked on its chain, which accounts for 55.77% of the TVL on all blockchains.