The seven-day average for Ethereum transaction fees is at their lowest rate since August of 2021, says a report from blockchain analytics company Arcane Research. It said the rates have been falling precipitously since the second week of January.
The report highlighted that now is a “good time” for swapping tokens or minting NFTs. Arcane puts the cost of a token swap to about $15, which is way below the $200 which ran much of the fall of last year. The company pointed out that wallet-to-wallet transactions are simpler. In 2021, it was running at $50.
The drop in fees convenes with the decline in crypto asset prices. The report shows that the exchange value of Ethereum has fallen nearly 12% in the last week, and nearly 15% in the last month. Analysts believe that the price of Ethereum is correlated to the transaction fees – as the price of Ether falls, the transaction fees become cheaper.
But as per CoinMetrics data, transaction fees as dominated in ETH as also at a six-month low. It points towards reduced demands on the network through declining interest or increased reliability on scalability solutions, such as sidechains and rollups. It should be noted that fellow blockchain networks that have now emerged as popular Ethereum’s rivals, such as Solana and Avalanche, have taken bites at its market share. They have managed to achieve this by offering similar services like games, DeFi and NFTs, etc at a much lower price and faster speeds.
Analysts also attribute the drop in transaction fees to lull in the interest in NFTs. Furthermore, Ethereum has been working on a long-term fix in an effort to make the network more scalable.