Ethereum, the world’s largest programmable blockchain, has seen its transaction fees drop to their lowest level in eight. According to data from CryptoQuant, the total daily fees paid on Ethereum fell to 1,719 ETH ($2.8 million) on Sunday, down 89% from the year-to-date high of 16,720 ETH observed on May 5.
The decline in fees is likely due to the rising popularity of Ethereum layer 2 (L2) scaling solutions. L2 solutions are designed to improve the scalability and efficiency of Ethereum by moving transactions off the main chain and onto a separate layer.
One of the most popular L2 solutions is Optimism, which uses a technology called Optimistic Rollup to bundle transactions together and process them off-chain. Optimism has seen its daily transaction volume surge in recent months, reaching a new all-time high of nearly 900,000 transactions on August 15. Another popular L2 solution is Arbitrum, which uses a similar technology called zk-rollup. Arbitrum has also seen its daily transaction volume increase significantly, reaching over 500,000 transactions on August 18.
The growth of L2 solutions is a positive development for Ethereum, as it will help to reduce congestion and keep transaction costs low on the main chain. As more users and applications adopt Ethereum, the demand for L2 solutions is likely to continue to grow. In addition to the growth of L2 solutions, the decline in Ethereum fees could also be due to the recent bear market in the cryptocurrency market. As the price of ETH has fallen, so too has the demand for transactions on the Ethereum network.
However, the long-term trend for Ethereum fees is likely to be positive, as the network continues to grow and develop. The rise of L2 solutions will help to improve the scalability and efficiency of Ethereum, making it more attractive to users and developers.