Ethereum gas fees crash 70% to 4-year lows – What’s driving the deep drop?

• A surge in Ethereum Layer 2 options have offloaded some transactions.
• Lower in community exercise as exercise to price ratio depict might have a hand on this decline.

Ethereum’s [ETH] blockchain, which is on the middle of powering many tasks throughout the crypto ecosystem together with DeFi and NFTs, witnessed a staggering 70% crash in gasoline charges, hitting a four-year low as of the twentieth of February.

The day by day charges dropped from $23 million to $7.5 million.

In keeping with knowledge from IntoTheBlock, the common gasoline worth has plummeted to round 5 gwei, translating to roughly $0.80 per transaction — a pointy decline from the $20-plus charges seen throughout peak exercise in 2024.

Supply: IntoTheBlock

This has left analysts and customers pondering the forces behind this drop. Two main drivers had been surge in Ethereum L2s offloading transactions and a lower in mainnet community exercise.

Rise of Ethereum L2 options

The rise of L2 options like Arbitrum [ARB], Optimism [OP], and Base, which course of transactions off-chain whereas leveraging Ethereum’s safety, has been one of many issue contributing to the low price values.

L2 networks now deal with over 1.5 million day by day transactions mixed, up from 800,000 a 12 months in the past.

Following the Dencun improve which launched “blobs” to cut back L2 knowledge prices, gasoline charges on these networks have dropped by as a lot as 90%, with some costing mere cents.

As an illustration, Arbitrum’s common price is now $0.15 in comparison with $2 earlier than the improve. This price effectivity has siphoned exercise from the mainnet, easing congestion and slashing charges.

Supply: L2Beat

For Rollups, knowledge is posted however nonetheless cut back exercise on the mainnet.

Validiums and Optimiums, just like Rollups, additionally periodically publish state commitments of transactions which can be validated by Ethereum, nonetheless knowledge will not be posted on the mainnet.

Declining community exercise

In the meantime, ETH’s mainnet noticed a slowdown with decline in day by day transactions from 1.2 million in January 2024 to only over 900,000 in February 2025.

This dip aligned with volumes on DEXs falling to $2.62 billion day by day, down from a 2024 peak of $5 billion.

The waning hype round memecoins and speculative NFT drops has additional softened demand for block house.

Because the Dencun improve, ETH issuance has exceeded burns by 197,000 ETH, or $500 million, indicating decreased price stress.

Supply: IntoTheBlock

Cheaper transactions might spur adoption, however there’s potential for challenges as that L2 fragmentation may dilute liquidity.

As L2s like Base — boasting $8 billion in TVL — proceed to thrive, Ethereum’s mainnet could evolve right into a safety spine reasonably than a transaction hub.