Ethereum Gas Fees Drop to a New Low This Year, There Are 4 Key Factors Behind It

Ethereum has seen the biggest gains on the daily chart among the major cryptocurrencies by market cap, with prices up 4.9% at the time of writing, trading at $2,328.58, bringing its weekly trend to sideways and monthly gains to 46.7%.

Further appreciation of Ethereum seems imminent as the network addresses a “disadvantage” facing competitors by improving high transaction fees to gain a higher market share. Data from ethGasStation shows that a fast or standard transaction costs between 45 and 50 gwei.

ETH gas fees have been falling since April 20, when they spiked to an average of $37, the highest cost since February 2021. That trend now appears to be reversing, with the metric now trading near its lowest point this year, with an average transaction cost of $10.22.

Anthony Sassano, co-founder of EthHub, believes that there are four main reasons why fees are getting cheaper: a 20% increase in the gas limit (block size), a cooling of the crypto market, the implementation of Layer 2 solutions, and the adoption of Flashbots, the latter of which seems to be playing a significant role.

According to NewsBTC, Flashbots is an organization that opens tools and improves the maintenance of miner extractable value (MEV). Unlike the Best Gas Auction (PGA), Flashbots has a positive effect on reducing gas fees and maintaining a "transparent" MEV ecosystem.

The developer, who goes by the pseudonym “Stephane,” noted that nearly 72.22% of Ethereum’s hash rate is engaged with Flashbots and their tools, which miners use to maximize their rewards, a metric that has grown by nearly 15% in the past two weeks.

The implementation of EIP-1559 in the London hard fork has sparked discontent among mining companies, who are committed to finding new ways to maximize profits. Spencer Noon, an investor, believes that Flashbots could become a major force in the Ethereum trading market.

“Diving into the early Flashbots data and the good genesis blocks, Ethereum miners have been given an incredible new revenue stream. With a 5% increase in revenue per block, and numbers that will continue to climb, few people realize how profoundly this will impact Ethereum’s budget.”

In addition, Ethereum investor Aftab Hossain believes that EIP-1559 can reduce transaction bidding wars and stabilize transaction costs. More importantly, some negative MEV strategies may be ineffective against the interests of Flashbots.

However, Hossain expects transaction fees to “rise” from current levels as ethereum’s blockchain is used for a multitude of purposes and demand increases, at least in the short term as sharding and new features like ETH 2.0 are being developed.

Hossain noted: “It doesn’t matter, Layer 1 will still be used for various TXs because it has unique composable utility and value that Layer 2 may not be able to provide for some time.”

The original text comes from newsbtc, compiled and edited by Blockchain Knight. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.