Ethereum (ETH), the world's leading smart contract platform, is experiencing a change in its fee structure. The network's paid revenue fell to its lowest point since April 2020.
Ethereum Gas Fees Reduced to Very Low Levels
During the last bull market, Ethereum users struggled with exorbitant transaction costs, often referred to as gas fees.
This situation has been exacerbated by network congestion due to increased activity in the non-fungible token (NFT) trading and decentralized finance (DeFi) yield sector.
However, this trend was reversed with the decline in cryptocurrency prices, the decline in NFT demand and the decrease in DeFi activities.
The emergence of layer 2 solutions designed to increase Ethereum's scalability and capacity has further contributed to the decline in fees.
While this is a positive development that allows for more affordable transactions for Ethereum users, it does have an impact on the supply dynamics of Ethereum (ETH).
Decreasing fees lead to a lower token burn rate, which affects the deflationary nature of ETH.
Data shows that over the past 30 days, ETH supply has increased by 33,500 tokens, equivalent to approximately $52 million, primarily due to decreased activity on the blockchain.
*This is not investment advice.