Key Takeaways:
Ethereum transaction fees dropped from a peak of $200 to $0.14.
The decline is thanks to a series of scaling upgrades to the blockchain.
Ethereum’s Layer 1 network activity is at an all-time high, even as fees fall.
Ethereum network fees have dropped to their lowest level since 2017, with the average cost of sending a transaction over the blockchain falling from a peak of $200 to $0.14 this year, according to data from Glassnode.
The decline is, in part, thanks to a series of upgrades to the blockchain. Since 2021, Ethereum has undergone several scaling upgrades, including the switch to Proof-of-Stake (PoS) and the so-called Fusaka and Dencun upgrades, which improved network capacity and efficiency.
More users have moved to Layer 2 (L2) networks like Arbitrum and Base, reducing congestion on the underlying Ethereum blockchain, or mainnet. Validators also agreed to increase the gas limit per block from 30 million to 36 million, meaning that each block can now process more transactions.
“Cheap transactions on mainnet are definitely a net positive for the industry,” Ivo Georgiev, cofounder and CEO of Ethereum-focused Ambire Wallet, told Cryptonews. “Users gain more confidence in the protocol, they concentrate more of their assets on mainnet, leading to better UX.”
Georgiev added that lower fees could “even unlock new possibilities such as new cryptographic protocols that would otherwise be prohibitively expensive, for example, quantum-proof ones.”
ETH transaction fees averaged $50-$200 during the NFT boom of 2021-2022 as network activity shot through the roof. Data shows that the fees fell sharply in November 2022 to under $2 before spiking to $35 in March 2024.
Fees have headed down ever since, with a sustained downturn starting in February 2025. In total, the amount of fees paid to validators – the people that help secure the network – has dropped from a peak of about 25,668 ETH (~$77M) five years ago to 153 ETH (~$450K), on a seven-day average, according to Glassnode.
Ethereum Transaction Volume at ATH as Fees Fall
Validators receive transaction fees each time they add transactions to a block, with higher fees getting priority. Low transaction fees often point to a decline in demand to use Ethereum block space, analysts say, which in a way signals there is less activity taking place on the blockchain.
The metric is volatile, and fees can rise dramatically from one day to the next, depending on ETH price action. Volatility spurs trading, which in turn propels on-chain activity and an increase in transaction fees, analysts say.
“There’s no mystery behind Ethereum’s falling transaction fees,” Georgii Verbitskii, founder of DeFi crypto service Tymio, told Cryptonews.
“It’s basic supply and demand. Fees rise when many transactions compete for limited block space, and they fall when demand drops. Right now, we’re simply seeing fewer transactions.”
Verbitskii said the decline in Ethereum network fees fits the broader “cool-off” phase that the crypto market is going through. He says activity tends to slow after periods of intense speculation and hype, as “users transact less, developers pause launches, and capital becomes more selective.”
“During these phases,” Verbitskii avers, “networks like Ethereum look cheaper to use, not because the system changed dramatically, but because demand temporarily stepped back.”
“Once market activity picks up again, whether through new applications, renewed DeFi usage, or a broader risk-on environment, transaction volumes will rise, and fees will adjust accordingly.”
It is notable that Ethereum’s Layer 1 network activity is at an all-time high, even as fees fall. According to Leon Waidmann, head of research at Lisk, Ethereum’s transaction volume hit more than 16 million this January.
Ethereum is now processing three times the number of transactions at just a third of the cost compared to the peak of the “fee-driven explosion” in 2021, Waidmann wrote in a post on X.
“What’s different: 2021 was a speculation-driven fee explosion. Now it’s actual usage at scale. People are paying for real economic activity,” he said.
Image: Leon Waidmann/X
Could Lower Fees Impact Validators?
While lower transaction fees are typically a welcome relief for Ethereum users, there is some concern that may pose a challenge to validators, who rely on transaction fees as a major source of income.
But Marcin Kaźmierczak, cofounder of crypto data provider RedStone, poured cold water on the fears. He told Cryptonews that Ethereum’s switch to the Proof-of-Stake mechanism in 2022 “eliminated miner revenue dependency on transaction fees entirely.”
“Validators now earn via staking yields, making MEV and priority fees less critical to network economics,” he said, adding:
“For network security, this is broadly healthy. Validator economics remain solid through staking rewards (~3% APY), so the network doesn’t depend on fee spikes for security.”
Kaźmierczak said low fees reduce friction for oracle submissions and data aggregation from companies like RedStone, an infrastructure layer that “benefits from cheaper, frequent state commitments” and updates.
“The real question isn’t security (which is robust),” he explains, “but whether Ethereum’s fee structure now properly incentivizes data availability to stay competitive as Layer 2 demand matures.”
As of this writing, ETH is trading at $2,714, down 7.7% on the day. The price has barely moved compared to this time a year ago, though it soared above $4,770 in August 2025.
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