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ETH Transaction Fees Drop By 58% But They Are Still Expensive

09/06/2020

ETH transaction fees drop by 58% but the fees are still quite expensive. The new scaling solutions are in the works as we are reading more in today’s Ethereum latest news.

ETH transaction fees drop by 58 percent which is the only good thing out of the recent ETH Crash aside from the rebound today. The average transaction fee on Ethereum hit $14.5 according to the data from BitInfoCharts. This is the highest average cost of an ETH transaction since 2018. For example, users have to pay transaction fees on Etehreum whenever they only want to move money around to different wallets or use it in other protocols. This means that the average cost of doing this is about $14.5.

big reaction, eth, ethereum price

The price of Etehreum which is the second-largest cryptocurrency by market cap crashed from the recent $487 to $390 marking a drop of 20%. Along with the tumbled movement to the average transaction fee, the fees collapsed to $6.1 marking a drop of 58%. Ethereum’s crash didn’t really coincide with the transaction fees as the price of ETH continued dropping to $317 marking a 19% lower than the Friday level. The average cost of an ETH transaction increased a little to $7.6 yesterday.

The news that the fees have dropped is great even with the rest of the week counted as an outlier as the fees hit $7.6 that is still the highest level since 2018. In part, these high transaction fees are due to the increased activity on ETH as the interest in the coin has grown since the summer rise in Defi and non-custodial financial services such as synthetic stocks and loans. Investors poured more than $8 billion into smart contracts since June. All of the major Defi protocols live on Ethereum which is where the increased activity comes from.

eth chart
ETH 24-Hour Chart (Source: Coingecko)

These transaction fees are high because Ethereum was going to explode. Network utilization hovers around 96% and if it gets higher, the network will clog up and become unusable. Scaling solutions are in preparation for ETH 2.0 and upgrade to the blockchain that will increase the capacity. As recently reported, Due to the storm of events, the number of users of the network increased and the blockchain analysts from Santiment reported that the number of new ETH addresses created per day, surpassed 100,000.