Ethereum Gas Fees Hit Five-Year Lows Following Recent Upgrades; Still Not A Win For ETH’s Value

The leading blockchain, Ethereum (ETH), has seen its gas charges, or transaction fees, plummeting to five-year lows, confirming improved network efficiencies following the latest technological upgrades. Ethereum gas fees at a five-year lowThe latest updates show Ethereum saw a dramatic decline in transaction charges, with the daily average gas price plummeting to record lows of 2.9 Gwei. That sent the average daily charges in USD to the $0.85 multi-year low. Dencun upgrade’s effectActivated in March 2024, the Dencun upgrade has contributed to the lessened ETH gas fees. The update improved the functionalities of Layer 2 blockchains, thus reducing the transactional weight on Ethereum’s main blockchain.Besides lowering fees, the technological upgrade switched most transactions to L2 platforms like Optimism, Base, and Arbitrum.Notably, the Dencun upgrade has triggered an up to 100% reduction in transaction fees, boosting the appeal of layer 2 platforms. Implications on ETH’s valueWhile reduced transaction fees mean cost benefits for Ethereum investors, the development poses a challenge due to possible liquidity and user fragmentation.An unplanned effect of the lower gas fees is reduced Ethereum token burn. The blockchain’s EIP-1559 mechanism destroys part of gas charges automatically, reducing ETH’s circulating supply and making the crypto an “untrasound money.”The declined gas fees have slackened Ether’s burning rate, translating to a reduced degree of decreasing the token supply.Ethereum supply has witnessed a slight uptick between March and August 2024, with the figure jumping from 120M to 120.2M ETH coins.While increased token supply might improve liquidity and attract more users to the ETH network, it could also catalyze bearish pressure on the altcoin’s price. Ethereum’s price outlookThe leading altcoin traded at $2,601 at press time, down nearly 3% over the past 24 hours. Its bearish stance reflects the broad market outlook, with bears dragging the global crypto market capitalization down 2% in the past day.ETH 1D Chart on CoinmarketcapMeanwhile, Ethereum has failed to overcome the crucial resistance at $3K in the past few sessions.The altcoin has dropped by over 35% since the Dencun upgrade, with token supply increasing by 197K ETH, worth about $500 million.Moreover, the Relative Strength Index at 40 suggests more weakness and impeding plunges for Ethereum prices.In summary, Ethereum’s reduced transaction fees reveal the complex interplay between market economics and technological innovations.While declined gas charges mean a technological win, boosting the network’s accessibility and user-friendliness, it challenges Ethereum’s economic model as it slows supply reduction, possibly hindering ETH’s price surges in the near term.More By This Author:Whale Accumulates Millions Of XRP Tokens From Binance Despite Bearish Sentiments Zcash (ZEC) Sees Surge In Trading Volume As Privacy Coins Gain Investor Attention Binance Completes 28th Quarterly BNB Token Burn, Billions Of Coins Incinerated