Low fees on ETH Tier 1 are putting pressure on ecosystem revenue.
On the 10th, Etherscan revealed that the gas fee for the Ethereum (ETH) Layer 1 blockchain fell to 0.067 Gwei amid the recent cryptocurrency market downturn.This fee drop brought swap transaction costs down to $0.11, NFT selling fees to $0.19, connecting to other blockchain networks to $0.04, and on-chain lending fees to $0.09. Ethereum transaction fees reached a recent high of 15.9 Gwei on the 10th of last month, but plummeted to 0.5 Gwei by October 12th following the market crash and have remained below 1 Gwei for most of the year since.
Investors and traders can leverage low transaction fees to execute on-chain transactions. However, analysts and industry insiders warn that excessively low fees could cause long-term problems for the Ethereum ecosystem's profitability.
Ethereum's Layer 1 network saw transaction fees exceeding $150 during the 2021 bull market, but since the Dencun upgrade in March of last year, Layer 2 network transaction fees have decreased, leading to a 99% drop in Ethereum's revenue.
Critics have pointed out that low fees may not provide sufficient revenue for validators and miners to process transactions and secure the blockchain, potentially leading to financial and security concerns. Low fees and revenue may also signal users leaving a particular blockchain network.
Binance stated that Ethereum has chosen a strategy of relying on Layer 2 networks to achieve scalability. While Layer 2 increases Ethereum's throughput and allows it to compete with modern high-throughput chains, it also erodes base-layer revenue, creating competitive pressure within its own ecosystem.
Reporter Jeong Ha-yeon yomwork8824@blockstreet.co.kr
