Ethereum’s base fees have reached a multi-year low of just 0.8 gwei, according to the most recent data.
Users are supposed to pay for transactions with gas fees. In such a way, it is possible to make sure that the network remains resilient to spam.
The base gas fee is the minimum amount of gwei that users are supposed to pay for a transaction to be valid. In addition, users can pay higher fees if they want their transactions to be included in the next block.
Ethereum fees depend on the level of demand for the network. Ethereum gas fees peaked at $196 back in May 2022.
The network experienced a dramatic drop in fees following the Dencun upgrade that introduced the so-called “blobs” that are capable of significantly enhancing scalability with faster and cheaper transactions.
The persistently declining fees have ruined the deflationary narrative for Ethereum promoters. According to data provided by Ultra Sound Money, only 7,729 ETH tokens were burned over the past seven days while 18,064 tokens were issued over the same time period.
In fact, during the second quarter of the year, the Ethereum blockchain experienced its highest level of inflation to date, according to Fidelity. The company’s analysts believe that the network is going to record more inflationary quarters.
According to Martin Köppelmann, co-founder of privacy-focused Ethereum sidechain Gnosis, a base fee of 23.9 gwei would be necessary in order to offset staking rewards. “Ethereum needs to get more L1 activity again and even if it sounds counterintuitive at such low rates, raising the gas limit can be part of a strategy,” he added.