Cryptocurrency enthusiasts may celebrate the entry and exposure of digital currencies to the mainstream audience day in and day out.
However, Ethereum enthusiasts have another reason to rejoice, as trading Ethereum hasn’t been this cheap for months.
The drop in Ethereum fees extended to Layer 2 solutions built on top of the Ethereum blockchain, symbolized by L2, with almost all fees coming to less than $1 on average for sending Ethereum and between $0.31 and $2.18 for exchanging cryptocurrencies.
Using Ethereum is getting cheaper:
Ethereum is the second largest cryptocurrency and the largest blockchain in terms of protocols and decentralized applications “dApp” operating on it.
Many decentralized trading platforms, smart contracts for enterprise applications, altcoins, shitcoins, stablecoins, NFTs, and countless other innovative products operate on this network.
But everything comes at a price, and all this popularity has driven Ethereum fees higher, complicating near-term adoption prospects and giving rise to several competing blockchains and scalability projects.
But things seem to be changing.
According to figures from Bitinfocharts, the average transaction fee on the Ethereum blockchain was $15.31, a figure not seen since October 2021, when the fee reached a low of around $13.
This represents a decrease of more than 75% in the average fee rate since November 2021, when the transaction cost averaged more than $62.8.
The transfer fee averaged $6.67, a metric that gives a breath of fresh air to Ethereum users who just want to make a simple payment or transaction, and who were weary of the high fees earlier.
Why are fees important?
The issue of fees is critical to the sustainability of Ethereum and other blockchain projects.
On Ethereum and all other blockchains that rely on Proof of Work (mining), users transacting in some sort of bidding process compete to process their transactions more quickly.
Simply put, the more fees you pay to miners, the faster your transaction time will be confirmed.
Unlike Bitcoin, Ethereum is not only used to transfer wealth but is an integrated blockchain, which means it can run decentralized applications with complex operations.
But the higher the complexity, the greater the mining power required to run the transaction.
For this reason, it is normal to have a fee of several hundred dollars for a complex token swap, especially in light of fast trades where a few seconds determine the difference between profit or loss, such as legitimate arbitrage or exploiting errors for suspicious purposes.
The ultimate solution to reduce the burden is to update Ethereum toward Ethereum 2.0, an update that seeks to rely on stakes rather than mining and offer scalable solutions such as hashing, which could increase transaction processing capacity by nearly 100,000 transactions per second, according to estimates by founder Vitalik Buterin. Ethereum network.
But the road is long, and there are many who doubt that modernization will succeed in his endeavour.
In the meantime, the best options for using Ethereum are L2 solutions like Polygon or Loopring, where sending digital tokens cost less than a dollar, or Ethereum rival blockchain networks like Binance BSC or Solana.
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