Blockchain analytics firm Arcane Research notes that Ethereum transaction fees are now “unusually” on a decline, highlighting a CoinMetrics data report that shows that the weekly average of Ethereum fees are currently at its lowest since August of 2021. In fact, the particular metric has purportedly been on an erratic downward trend since the second week of January 2022, a stark contrast to the usual notion that Ethereum transaction costs are only going to be more expensive down the line.
While transaction fees in Ethereum is indeed on a steep decline, that does not necessarily mean that it has now become cheap, particularly to average consumers. Arcane states that the cost of a mere token swap still costs about $15 – quite a huge sum still for the simple service, but a definite improvement from the outrageous $200 transaction fees back last year’s fall.
This drop in fees unsurprisingly coincides with the overall decline of crypto asset prices, with Ether (ETH) itself dropping as much as 12% in the past week alone and almost 15% in the past month. Generally, as ETH declines in value, so too, is its transaction fees.
That being said, what experts believe as the main reason for the transaction fees’ decline is the cooling-off of the non-fungible token (NFT) market, the blockchain-supported contracts tied to real-world or digital assets. NFT’s popularity, which caught fire last year, translated to a massive increase in traffic for the network. This is because Ethereum is the one responsible for managing its supply and demand through the calculation of its computing costs for each transaction, auction bid, token swap, and more, to then pass along to the user in the form of a fee pegged in ETH.