Over the past month, gas fees on the Ethereum blockchain have decreased by nearly 90%, leading to a substantial drop in transaction costs. But what’s behind this significant shift? Let’s explore the key factors driving this change through data and analysis.
Recent figures from The Block Data Dashboard indicate that the average transaction fee on Ethereum is now around $4.50, down from approximately $45 just a month ago. This 90% reduction marks the lowest average transaction cost in the past six months. It’s worth noting that these values are based on a 7-day moving average, reflecting shorter-term trends rather than isolated daily spikes.
So, what has caused this rapid decline in gas fees? Several interconnected factors help explain the trend.
Key Factors Driving Lower Gas Fees
Decreased Transaction Volume on Ethereum
In recent weeks, Ethereum has experienced a notable drop in overall transaction activity. The broader cryptocurrency market downturn has contributed to reduced trading volumes in decentralized finance (DeFi) and non-fungible token (NFT) marketplaces—both major drivers of Ethereum network usage.
Data clearly supports this trend: daily transactions on Ethereum have fallen from around 1.65 million a month ago to roughly 1.2 million today. According to The Block Data Dashboard, both NFT trading volume and the number of transactions have also declined.
Growth of Layer 2 Scaling Solutions
Another major factor is the increasing adoption of Layer 2 scaling solutions, with Polygon (formerly Matic Network) standing out in particular. In recent weeks, transaction volume on the Polygon network has grown substantially.
Data from PolygonScan shows that daily transactions on Polygon have surged from around 1.5 million to nearly 7.5 million—more than five times Ethereum’s current daily transaction count.
Polygon uses a Proof-of-Stake (PoS) consensus model, while Ethereum currently still relies on Proof-of-Work (PoW). Although both models have strengths and limitations, PoW networks often face scalability challenges, which can lead to higher transaction costs during peak usage.
It’s clear that rising demand for Ethereum scaling solutions has made Polygon a popular choice among users. The Block Research recently reported that more than 350 DeFi projects are now part of the Polygon ecosystem.
Increased Use of Flashbots
The growing use of Flashbots is another factor helping reduce gas fees. Flashbots allow traders to communicate off-chain with Ethereum miners through private channels to execute transactions. This reduces the number of spam transactions occurring on-chain, thereby lowering competition for block space and reducing gas prices.
In other words, fewer bots are driving up fees through aggressive gas bidding wars.
The Impact on DeFi and NFT Markets
The decline in gas fees has made Ethereum more accessible for everyday users and small-scale traders. High fees had previously made it impractical for many to participate in DeFi protocols or trade NFTs. Now, with lower costs, activity may gradually rebound.
Additionally, the total value locked (TVL) in Polygon-based DeFi protocols has continued to break records. As of mid-June, it surpassed $8.5 billion, with leading protocols including Aave ($3.7 billion), SushiSwap ($1.6 billion), and QuickSwap ($1.5 billion).
This migration of value and activity to Layer 2 solutions has directly contributed to lowered demand—and therefore cost—on the Ethereum mainnet.
What Does the Future Hold?
The good news is that this trend may continue. More Ethereum scaling solutions—such as Optimistic Rollups and other Layer 2 technologies—are expected to launch in the near future. These solutions will further alleviate network congestion and help keep transaction fees low.
Ethereum’s long-awaited transition to Proof-of-Stake with Ethereum 2.0 will also improve scalability and reduce energy consumption, potentially leading to a more sustainable fee structure.
For now, users can enjoy lower costs and explore the growing range of tools available to navigate the blockchain space efficiently 👉 Explore more strategies for low-cost transactions.
Frequently Asked Questions
What are Ethereum gas fees?
Gas fees are transaction costs paid by users to compensate for the computational energy required to process and validate transactions on the Ethereum blockchain.
Why did gas fees decrease recently?
Fees dropped due to reduced transaction volume, increased use of Layer 2 networks like Polygon, and off-chain transaction tools like Flashbots.
Will gas fees stay low?
While fees may fluctuate, wider adoption of scaling solutions and Ethereum’s upcoming upgrades are likely to help keep costs lower than in previous periods.
What is Polygon?
Polygon is a Layer 2 scaling solution that enables faster and cheaper transactions by processing them off-chain before settling on Ethereum.
How do Flashbots reduce gas fees?
Flashbots enable off-chain communication between traders and miners, reducing network spam and competition for block space.
Can low gas fees increase Ethereum adoption?
Yes, lower fees make Ethereum more usable for small transactions and decentralized applications, potentially attracting more users.