The average cost of Ethereum transactions has dropped to its lowest point in 49 days, marking the end of ultra-high transaction costs.
According to data from BitInfoCharts, yesterday, the average transaction fee on Ethereum was $2.248, which was the lowest point since August 9 ($1.94). On August 23, the average transaction fee was as low as $2.28.
On September 2 this year, the average transaction fee of Ethereum hit an all-time high-$14.583.
One of the reasons for the high fees this summer may be the rise of DeFi or decentralized finance this summer. DeFi refers to a large number of non-custodial financial products, including DeFi loan agreements, decentralized stablecoins and synthetic assets.
September 2 showed that the DeFi boom reached its peak. After that, network transaction fees began to drop. On September 17, Uniswap announced the issuance of governance token UNI, and started
“Throw money.” Suddenly a large number of users flocked to receive UNI, and the network fee rebounded sharply, reaching 11.612 US dollars on September 17. With the decline of the UNI effect, the network fee has experienced a sharp drop this time.
When the demand for processing transactions exceeds the miners or blockchain space to process transactions, transaction fees will increase. The increase in transaction costs is more of a benchmark for increased network activity. Costs have fallen, indicating reduced activities.
In the past few months, a lot of money has been invested in these agreements. According to data from the indicator website DeFi Pulse, today nearly $11 billion in funds are locked into DeFi smart contracts; in June this year, this figure was only $1 billion.
These largest DeFi smart contracts are stored on the Ethereum blockchain. However, this has also resulted in Ethereum, which can only process about 14 transactions per second, has been struggling to keep up, and network transaction fees have risen.
And the fee is now decreasing, which may mean that DeFi activities are also decreasing. This may also mean that people are starting to switch to other blockchains. This may also mean that people are beginning to rely on second-tier solutions (software built on the Ethereum blockchain to make transactions cheaper or faster), or DeFi smart contracts become more efficient, or simply reduce transaction.
For whatever reason, these fee reductions are undoubtedly welcomed by traders in the emerging DeFi market.
