Ethereum Network Sees Surge in Fees Despite Drop in Active Users: What’s Driving the Spike?

Coinspeaker
Ethereum Network Sees Surge in Fees Despite Drop in Active Users: What’s Driving the Spike?

Earlier this month, the average transaction fee on the Ethereum network fell below $1, in what was the first time in over four years that such will happen.

The last time that the average transaction fee on the network was within this range was around July 2020. This was way before Ethereum ETH $2 647 24h volatility: 2.0% Market cap: $318.52 B Vol. 24h: $16.67 B transitioned to the proof-of-stake model via the Merge upgrade.

Recently, however, the seven-day moving average transaction fee on Ethereum has been on the rise. As of Monday, data from The Block showed the value to be $3.52, signifying that it has more than tripled since September 1 when the same fee was just $0.85.

Meanwhile, just as transaction fees are picking up, the burn rate of Ethereum is also spiking on the side. In just three weeks, the burn rate has seen an over 1600% increase, taking its value from 80.27 eth on September 1 to 1,360 eth on September 21.

Over the last 30 days, Uniswap has been the smart contract with the most gas consumption on the network. Other top consumers include Uniswap’s V2 variant and Telegram-based trading bots Maestro and Banana Gun. Also on the list were ETH transfers and other transactions carried out with stablecoins such as Tether USDT $1.00 24h volatility: 0.0% Market cap: $119.19 B Vol. 24h: $44.78 B and Circle’s USD Coin USDC $1.00 24h volatility: 0.0% Market cap: $35.97 B Vol. 24h: $5.99 B .

Interestingly, while transaction fees and burns are currently on the rise, the reverse has been the case for the seven-day moving average of active accounts on the network. With the value currently at 385,000 accounts, this represents an 11% dip from its value at the beginning of the moment. It is also the lowest value year-to-date and marks the network’s lowest since December 1, 2023.

For what it’s worth, Ethereum has recently come under the spotlight as crypto enthusiasts raise worrying questions about its fading popularity. This led Bitwise CIO Matt Hougan to affirm in a recent statement that “No one likes Ethereum right now.”

The statement, however, may be justified given that the ratio of Ethereum to Bitcoin’s market cap hit its lowest value in three years last week. That is, according to a recent Coinspeaker report. Though this has since recovered slightly, daily revenue for Ethereum stakers also recently hit a six-month low.next

Ethereum Network Sees Surge in Fees Despite Drop in Active Users: What’s Driving the Spike?