Reshab AgarwalEthereum gas fees are a major topic for discussion. There was a time when the average transaction fee even touched $100. However, as the crypto market has shrunk, and so has Ethereum’s price and demand, its gas fees have fallen considerably. It is still much higher compared to layer 2 networks on Ethereum, but we can’t expect the same for layer 1 solutions. However, as the Ethereum merge nears and gas fees continue to stay low, we can expect a further drop after ETH becomes POS, but it will take time. The merge doesn’t officially have to do anything with transaction fees or throughput, said ETH foundation.
Ethereum gas fees fall by 99%
Coinmarketcap reported that the highest gas fees of Ethereum were $196.638, which is insane. However, it has fallen more than 99% since that level, with the average fee per transaction at $1.37. The median transaction fee is even lower at $0.544. This makes Ethereum transactions a lot more viable, but it’s still not good enough for smaller transfers like for a coffee or burger. In fact, if we compare it even to Bitcoin transfers that are considered completely cheap, ETH gas fees are higher.
Credit: The Economic Times
For the same, we have layer 2 solutions built on Ethereum with transaction costs of less than 10 cents. For example, if you transfer Ethereum via Metis, then the cost would be 1 cent per transfer. At the same time, swapping on the network costs 6 cents. Another popular L2 solution, Loopring, costs 3 cents per transfer and around 37 cents for trading. Other L2 solutions also have lower fees as compared to Ethereum.
Why do Layer 2 solutions have lower fees?
Off-chain technologies created “on top of” the Ethereum main chain make up layer 2 solutions. They operate as smart contracts on Ethereum and communicate with off-chain software without requiring modifications to the basic protocol.
Although Layer 2 solutions may accomplish a variety of tasks (such as scaling payments or smart contracts or doing computation off-chain), they always have one trait: they offload the majority of the work to a permissionless blockchain, which guarantees security. This makes them more scalable and cheaper.
What are your thoughts as Ethereum gas fees stay low ahead of the merge? And do you think that after ETH shifts to POS the fees will go down? Let us know in the comments below. And, if you found our content informative, share it with your friends.
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