Low Ethereum Gas Fees Send ETH Burn to Annual Low

In July 2021, EIP 1559 has been deployed on the Ethereum network. In practice, this modified the operation of fees on the network. One of the major changes was the introduction of the systematic destruction of part of transaction fees. This notably made it possible to slow down the inflation of ETH. Faced with the reduction in fees on Ethereum, burn is at its lowest.

ETH burn at its lowest

On Sunday, May 5, the burn of ETH from EIP 1559 has reached its lowest level since several months, with 610 ETH destroyed. If we look at the history since the deployment of EIP 1559, we have very rarely reached such levels.

ETH burn at annual low – Source: TheBlock.

Thus, we are a long way from the thousands of ETH destroyed daily since the start of the year. However, since its implementation, EIP 1559 has generated the destruction of 3.6 million ETH which represents $10.3 billion at current prices.

Costs: the crux of the matter

Some might think that this decrease in ETH destroyed via EIP 1559 is caused by a decrease in activity on Ethereum. However, the network is doing well. Indeed, Ethereum records an average of 1.2 million daily transactions. A figure up slightly over the last 12 months.

Curve of the evolution of the number of daily transactions on the Ethereum networkCurve of the evolution of the number of daily transactions on the Ethereum network
Transactions on Ethereum are in good shape.

So, activity is not the cause of this fall. In reality, to understand the origin, you have to look at the costs on the network. Oh yes, the destruction of ETH via EIP 1559 is intrinsically linked to transaction fees.

And these are at their lowest since the start of the year. According to TheBlock data, average transaction fees are around $3. This marks a significant reduction compared to the $25 recorded in the middle of March. Or even the forty dollars per transaction that we saw at the end of 2021.

Curve of the evolution of transaction fees on the Ethereum networkCurve of the evolution of transaction fees on the Ethereum network
Significant lull in transaction fees on Ethereum.

So, in terms of gwei, gas charges have been hovering between 4 and 10 gwei in recent days. A boon for all Ethereum users.

Do L2s scale Ethereum?

THE layers 2 of Ethereum could well be at the origin of this drop in fees. As a reminder, fees on Ethereum follow an auction system. Therefore, the more users and transactions there are, the more the fees will tend to increase.

However, with the rise of L2 and in particular with the deployment of the Cancun-Deneb hard fork who introduced Blobs, they have become a solution of choice.

As data from L2Beat shows, Ethereum L2s are currently counting 9.5x more activity than mainnet and make it possible to process more than a hundred transactions per second.

Curve of the evolution of the number of tx/s of L2s in comparison with EthereumCurve of the evolution of the number of tx/s of L2s in comparison with Ethereum
L2s process almost 10x more tx than Ethereum.

At the top we find Base, with 80 million transactions over the last 30 days. It is followed byArbitrum and its L3 Degen Chain with respectively 49 and 61 million transactions over the last 30 days.

For comparison, Ethereum recorded 35 million transactions over the same period.

For their part, Ethereum developers are preparing for the next hard fork to come. Titled Prague Electra, this should see the light of day on the network by the end of the year.

-

-

PREV Isle-Jourdain. Unforgettable day for the Flame
NEXT Israel-Hamas War. Video of hostage capture, anger of the Jewish state… the latest news