Ethereum Network Fees Drop Significantly: Implications for ETH Price

Ethereum network fees have dropped by 62%, a significant decline compared to a 22% decrease observed on Tron, Solana, and HyperEVM during the same period. This downturn indicates a cooling in Ethereum's base layer activity, with total value locked, or TVL, falling from $100 billion to $76 billion in just two months.

Despite this, layer-2 networks like Base and Polygon are seeing growth, with Base transactions rising by 108% and Polygon by 81%, suggesting continued momentum in Ethereum's expanding layer-2 ecosystem.

On Tuesday, Ether rallied to a three-week high near $3,400, bolstered by weak US job market data, which has led to expectations of a less restrictive US monetary policy. However, traders remain cautious due to the slowdown in Ethereum network activity and limited demand for bullish leverage.

The annualized funding rate for ETH perpetual futures is holding around 9%, indicating a balanced distribution of leveraged positions, but traders are on the defensive following reports of 1.85 million layoffs in October, the highest since 2023.

Ethereum's decentralized exchanges have seen a decline in seven-day volumes, dropping to $13.4 billion from $23.6 billion four weeks prior, while DApp revenues hit a five-month low of $12.3 million. As Ethereum maintains a 68% market share in the blockchain space, its layer-2 scalability incentives may provide a more sustainable growth model compared to competitors.

The upcoming Ethereum Fusaka upgrade on December 3 is expected to improve rollup efficiency, potentially influencing network fees further. Overall, while Ethereum's base layer shows signs of decline, the activity in its layer-2 solutions remains robust, indicating that neither on-chain nor derivatives data suggest a significant weakness in ETH price dynamics, according to Cointelegraph.