Gas fees on the Ethereum blockchain have dropped by nearly 90% over the past month with its average transaction fees now at a six-month low. Ethereum prices may have had an impact on the price of gas as they are still consolidating, ranging between $2,550 and $2,850 this month, and are mostly echoing bitcoin in terms of price action.
Ethereum transaction fees have fallen to their six-month low as the crypto markets continue to consolidate with both DeFi and non-fungible token (NFT) transactions having declined with the recent market crash.
One of the few advantages of a down-trending market is a decline in demand for Ethereum and the resultant drop in gas fees.
The decline in gas fees comes after a tumultuous month in the markets with the second largest cryptocurrency seeing a 60% decline in price during May but has since recovered by 54% in June.
According to The Block's Data Dashboard, the average transaction fee on Ethereum has fallen to around $4.5 from nearly $45 a month ago, a decline of nearly 90%.
For instance, daily transactions on Ethereum have fallen to about 1.2 million versus 1.65 million a month ago with NFT transactions and volumes having also declined.
The average transaction fees are now at a six-month low based on the 7-day moving average (7MDA), indicating a short-term trend.
Another reason for the lower gas fees includes the growing usage of Layer 2 scaling solution Polygon with an increased number of transactions on the network in recent weeks.
From about 1.5 million, daily transactions on Polygon now stand at nearly 7.5 million which is over five times more than the number of daily Ethereum transactions.
Meanwhile, the increased usage of flashbot transactions could be another factor that has contributed to lower gas fees. Flashbots let traders communicate with Ethereum miners off-chain to execute transactions to reduce the number of spam transactions on-chain while lowering gas fees.
Ethereum has currently been battling to scale in terms of transaction fees with plans still in motion to launch ETH 2.0. The project recently completed the Berlin upgrade with Ethereum Improvement Proposals (EIPs) included in improving gas prices.