A few months ago, the average gas price on the Ethereum network reached 150-200 gwei, but since the end of May it has dropped to 15-30 gwei – this is the lowest level since March 2020.
One gwei is a fraction of one ETH (0.000000001 ETH). Although the price of gas has dropped significantly, the average transaction cost on the Ethereum network is now $ 8.15, up from the low of $ 2.31 reached on June 26. This is because the transaction fee is calculated by multiplying the gas price by the amount of gas used. Different types of transactions require different amounts of gas to be used.
As such, bidding on an NFT auction, making a deal on a decentralized exchange, or sending ETH to someone can have potentially different costs because these transactions vary in complexity. The price of gas changes depending on demand – when the network is used by many people, prices rise, and when activity decreases, they fall.
Ethereum tier 2 solutions such as Polygon and Arbitrum, which take some of the load off the grid, have played a role in the current gas price decline, according to a Coin Metrics report. Gas prices began to decline in late April – long before the ETH price collapsed from a record $ 4,165 to $ 2,335 – after the gas limit was raised from 12.5 million gwei to 15 million gwei per block. The result of the change was that more transactions could be placed in each block, which reduced demand.
In addition, arbitrage bots that profit from transactions on decentralized exchanges have traditionally raised fees – they voluntarily paid a higher gas price to “push” transactions that help them profit from trading. But these operations are gradually moving from the Ethereum blockchain to parallel chains.
The next major correction in the price of gas and the average transaction value of Ethereum may occur after the deployment of the London hard fork, which is scheduled to activate in August.
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