Low transaction fees are a blessing for traders, but aren’t we seeing the beginning of more serious problems with Ethereum’s monetization model?
On Sunday, gas fees on Ethereum’s base layer dropped to just 0.067 Gwei, levels we haven’t seen in months. Data from Etherscan show the scale of the phenomenon: a swap currently costs an average of USD 0.11, an NFT transaction costs around USD 0.19, a bridge to another blockchain network will cost a symbolic USD 0.04, and an onchain loan will cost only USD 0.09.
Cheap today, problematic tomorrow?
For comparison, on October 10 – the day of the fateful market crash that wiped out some altcoins by over 90% in 24 hours – fees reached 15.9 Gwei. Just two days later it dropped to 0.5 Gwei and stayed below 1 Gwei for most of October and November. Investors can seize the moment and transact on the main layer for pennies. But analysts are sounding the alarm – so low fees may signal fundamental problems in the ecosystem.
Think back to 2021, when at its peak, a transaction could cost over $150 (it did, I’m not making this up). After the Dencun update in March 2024, which lowered costs for the layer-2 network, Ethereum’s revenue dropped by 99%. Critics argue that such low fees are simply unsustainable for any blockchain network. It’s not just a financial issue – it’s also about safety. Without adequate revenue, validators may lose incentive to secure the network. And if fees are a response to user demand, maybe we’re seeing an exodus from the platform?
The double-edged sword of a layer-2 strategy. Ethereum on the precipice?
Ethereum has focused on an ecosystem of separate layer-2 networks, and this is where a paradox arises. As Binance Research notes, second-level layers allow Ethereum to scale and compete with newer, faster chains. Problem? These same layer-2 networks cannibalize base layer revenues, creating competition within their own ecosystem.
Ethereum seems to be trapped in its own success. Will Vitalik Buterin’s team find a way out of this situation?
