Following a notable spike that happened in the aftermath of the Terra collapse, Ethereum gas fees appear to finally be cooling off. According to data provided by Santiment, the cost of transactions on the Ethereum network is now back to the level it was last summer.
Ethereum Gas Fees: Issues and Potential Resolution
Ethereum gas fees refer to the charges paid by users to carry out any activity on the Ethereum blockchain. And usually, these fees tend to skyrocket the times that the network gets congested.
That explains why in early May, Ethereum fees saw a huge spike following the crash of the Terra platform. As expected, once the TerraUSD (UST) lost its peg, users quickly started migrating to more centralized Ethereum-based stablecoins. They found suitable alternatives in Circle’s USDC, Tether-backed USDT, and others, guzzling some sizeable amount of gas fees alongside, on the Ethereum network.
Meanwhile, Ethereum continues to see a lot of criticism for its sky-high transaction rates. In fact, its lack of scaling has given birth to other decentralized blockchains that allow for smart contracts. Tagged the ‘Ethereum Killers,’ the competing blockchains include Avalanche, Solana, Polkadot, and some others.
Nonetheless, Ethereum is hoping to solve its gas price issue as soon as it migrates to the proof-of-stake model. And going by the prediction of Ethereum co-founder, Vitalik Buterin, the migration could happen as soon as this August.
It should also be noted, however, that the upgrade to Ethereum 2.0 would not only eliminate the high gas fees. In addition to that, energy consumption on the network is expected to be reduced to the barest minimum as well.
Hope For ETH Prices?
Interestingly, Santiment also mentioned that there’s a chance that ETH prices pick up the pace. The on-chain metrics feed tweeted in part:
“Historically (but by no means automatically), $ETH prices rise after average transactions dip below $5.”
For what it’s worth though, average transaction fees are now $2.54, meaning we might be bracing up for an ETH price upsurge.