Ethereum Gas Fees Drop Amid Network Slowdown

Gas fees on the Ethereum layer-1 blockchain have dropped significantly to just 0.067 Gwei, following a notable slowdown in activity amid the recent historic market crash in October. The average cost for executing a swap on Ethereum is currently around $0.11, while non-fungible token sales incur a fee of approximately $0.19.

Bridging digital assets to other blockchain networks costs users about $0.04, and on-chain borrowing transactions are priced at $0.09, according to Etherscan. This decline in gas fees comes after a peak of 15.9 Gwei on October 10, the day of a dramatic market flash crash that saw some altcoins lose over 90% of their value within 24 hours.

By October 12, fees had already fallen to 0.5 Gwei and have mostly remained below 1 Gwei throughout October and November. The significant drop in transaction fees presents an opportunity for investors and traders to execute on-chain transactions more cost-effectively.

However, analysts and industry executives caution that excessively low fees could pose risks for the Ethereum ecosystem. Critics argue that low fees are unsustainable and may lead to financial and security challenges, as they result in decreased revenue to incentivize validators or miners responsible for processing transactions and securing the blockchain.

Ethereum has seen a drastic revenue decline since the Dencun upgrade in March 2024, which dramatically lowered fees for its layer-2 scaling networks. Reports indicate that revenue has contracted by 99%, contrasting sharply with the 2021 bull run when transaction fees could exceed $150 during network congestion.

The low fees may signal a shift in user engagement, potentially indicating that users are moving away from Ethereum. Furthermore, the scaling strategy that relies on an ecosystem of separate layer-2 networks presents a double-edged sword.

While these networks enable Ethereum to scale and compete with newer high-throughput chains, they also compete for revenue with the base layer, potentially cannibalizing its earnings. According to research from Binance, this competition within the ecosystem could create further challenges for Ethereum's long-term sustainability.