Ethereum Transaction Fees Drop to Five-year Low
Transaction costs on the Ethereum network have dropped to their lowest level in five years, as blockchain activity has slowed, according to on-chain analytics platform Santiment.
Currently, Ethereum network fees average around $0.168 per transaction.
Santiment marketing director Brian Quinlivan explained in an April 17 blog post that this drop in fees reflects a decrease in user activity, including fewer Ether transfers and interactions with smart contracts.
“When many people are using Ethereum, users bid higher fees to get their transactions confirmed faster. This drives the average costs up,” Quinlivan said.
“When fewer people are transacting, like we see now, users don’t need to bid much. As a result, the average fee drops,” he explained, adding: “It’s essentially a supply and demand system.”
Quinlivan added that from a trading standpoint, low fees could suggest the market isn’t yet primed for a price recovery.
He noted that traders appear to be waiting for greater clarity on global economic conditions before resuming their usual trading volume involving Ether and other altcoins.
Both traditional and crypto markets experienced a decline after U.S. President Trump announced sweeping tariffs on April 2.
Despite exemptions and a 90-day pause for most countries, many assets have yet to recover to pre-announcement levels.
ETH has dropped more than 12.5% over the past 14 days and has remained relatively flat in the last 24 hours, trading just under $1,600, based on data from CoinGecko.
“We can visibly see the increased sensitivity toward Ethereum discussions and tariff/economy news as prices have really threatened long-time support levels,” Quinlivan said.
“The more the retail community leans away from an asset, especially one with still thriving development, the higher the likelihood of an eventual surprise rebound with little resistance,” he added.
Following earlier delays caused by configuration issues and a disruptive attacker during Holesky and Sepolia testnet deployments, Ethereum’s Pectra upgrade is now scheduled to launch on the mainnet on May 7.
The first phase will double layer-2 blob capacity from three to six, lower transaction fees, reduce congestion, and enable fee payments in stablecoins like USDC and DAI.
The staking cap will also be raised significantly — from 32 ETH to 2,048 ETH.
A second phase of Pectra is planned for late 2025 or early 2026.
This stage will introduce a new data structure to improve storage efficiency and a system that allows nodes to verify transactions without needing to store all data locally, boosting scalability.
Pectra builds on the momentum of Ethereum’s Dencun upgrade in March 2024, which previously lowered layer-2 transaction fees and enhanced rollup economics across the network.
Sources:
https://cointelegraph.com/news/ethereum-fees-drop-five-year-low-user-lull
https://insights.santiment.net/read/ethereum-s-network-costs-hit-historically-low-milestone-8619
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