The average transaction fees on the Ethereum (CRYPTO: ETH) have fallen to a seven-month low, according to recent on-chain data.
What Happened: A new report from blockchain analytics firm Arcane Research finds that the seven-day average for Ethereum transaction fees is at the lowest rate since August.
According to data from Y Charts, the average transaction fee fell to a low of $1.7 on Monday. The average ETH transaction fees are currently 82% lower than they were at the same time last year.
Why It Matters: The network’s declining transaction fee can be attributed to a number of factors – one of them being a drop in Ethereum-based nonfungible token (NFT) trading volume.
Ethereum volumes on decentralized marketplace OpenSea have fallen significantly over the past few weeks. Volumes fell from a high of $247 million on Feb. 1 to $67 million on Mar. 1. Over the same time, the median gas price on the network fell to half of what they were at the beginning of February.
The use of L2 protocols like Polygon (CRYPTO: MATIC) and Optimism has likely played a part in lowering ETH’s network congestion and thereby its fees, along with rival L1 networks like Solana (CRYPTO: SOL) and Avalanche (CRYPTO: AVAX) that offer similar decentralized services with lower fees and faster transaction speeds.
Lower on-chain activity given the lack of positive price action surrounding ETH could be another reason for lowered transaction fees. ETH has failed to gain momentum above the $3,000 mark since late January and is trading around the $2,700 level currently.
Price Action: At press time, ETH traded at $2,735, gaining 8.45% in the last 24 hours.
Photo by shutter_speed on Unsplash