[Ethereum Gas Fee continues to plummet, this is a major problem]
Latest data shows that Ethereum’s base fee has dropped to its lowest point in years at just 0.8 gwei. Users pay the gas fee for transactions to ensure that the network is resistant to spam attacks. The base fee is the minimum number of gwei required to make the transaction valid. If users want the transaction to be processed faster, they can choose to pay a higher fee.
Ethereum fees depend on network demand. In May 2022, gas charges peaked at $196. However, after the Dencun upgrade, the cost dropped significantly. This upgrade introduces "blobs" technology to improve scalability functionality, making transactions faster and cheaper.
However, the decline in fees plays into the deflationary narrative of Ethereum promoters. According to data from Ultra Sound Money, only 7,729 ETH were destroyed in the past seven days, but 18,064 new tokens were issued during the same period. Fidelity’s report states that Ethereum experienced its highest inflation levels ever in the second quarter of this year and expects more inflationary quarters to come.
Martin Köppelmann, co-founder of Ethereum sidechain Gnosis, said that to offset staking rewards, the base fee should reach 23.9 gwei. He believes that Ethereum needs to increase Layer 1 activity, even if the rate is low, and increasing the gas limit can be part of the strategy.