A gas fee for the Ethereum network is a fee that compensates for the consumption of energy that is spent in processing and validating a transaction. The users pay the Ethereum gas fee for every transaction they perform. Value depends on the network congestion and demand for particular services or products like decentralized apps or non-fungible tokens.
Ethereum network also utilizes the gas fee to strengthen its layer security. LayerThis ensures that hostile elements do not enter to spam the network.
A Drop In Ethereum Gas Fee
The value of the gas fee for the Ethereum network reached its 6-month lowest figure. Some expected that the fall in the value of ETH to $2,800 could be a reason behind it. However, the decrease in the demand for the decentralized apps of the Ethereum network.
Ethereum gas fee has been on the declining trend since January 2022. This week, it touched the lowest mark in the last six months.
Ethereum gas fee has also gone down due to the decrease in the volume of NFT trading. Users expressed a lower interest in trading NFTs.
Fewer transactions related to decentralized apps and non-fungible tokens attracted less congestion on the network. The lower congestion further reduced the gas fee for the Ethereum network.
DappRadar also acknowledged a fall in the trading activity related to non-fungible tokens. It is a tracking & analysis service for decentralized apps. DappRadar stated that there had been a significant decline in the number of NFT trading over the last 30 days.
OpenSea reported a fall of 39.58% in NFT trading, and CryptoPunks reported a fall of 29.53% in NFT trading.
Community members had earlier flagged concerns over the high gas fee prices. Developers even came up with Avalanche, Solana, and Binance Smart Chain to tackle this issue. Their goal was to offer cheaper gas prices and maximize transaction rates on the network.
To put things into perspective, the gas fee of a network depends on the value of the native token of the network.
For instance, the usage of decentralized apps and non-fungible tokens was highest during May 2021. So was the gas fee for the Ethereum network, and users were paying the gas fee as high as $68 for every transaction.
The high usage of dApps combined with the popularity of NFT caused congestion on the network, thereby putting pressure on processing & validating each transaction on time. The higher the usage, the more prone a network is to security breaches. Therefore, security concerns also acted as a minor factor.
