- Ethereum transaction fees have dropped by 80% in one month, providing relief to users and critics who have criticized the high fees as a flaw in the blockchain.
- The decline in fees coincides with a decrease in interest and market cap of PEPE, a meme-themed altcoin that caused a spike in fees during the memecoin frenzy.
The Ethereum blockchain has witnessed a substantial drop in transaction fees, offering relief to users and critics alike. Over the course of one month, transaction fees have plunged by 80%, reducing the burden on users who were grappling with soaring costs. The decrease comes as the popularity of the meme-themed altcoin, PEPE, wanes, leading to a decline in market capitalization and a subsequent decrease in transaction fees.
During the memecoin frenzy in May, Ethereum gas fees reached their highest levels since 2022. This surge was primarily attributed to the emergence of PEPE, which turned many investors into overnight millionaires. However, recent data from on-chain analytics firm IntoTheBlock reveals that Ethereum transaction fees have declined by more than 16% in just one week.
Zooming out to examine the broader picture, the transaction fee drop of 80% over the span of a month is remarkable. From a high of $27.62 on May 5th, fees have now decreased to $5.50 as of June 4th, reaching levels not seen since mid-April. This significant reduction marks a major turning point for Ethereum, as critics have long criticized the exorbitant gas fees as a “fatal flaw” of the blockchain.
Not only the mainnet, but also Ethereum layer 2 scaling solutions were affected by the surge in transaction fees during the memecoin craze. Notable spikes were observed on chains built using zero-knowledge proofs, such as Polygon zkEVM and zkSync Era. Transaction costs on these rollups ranged from $2 to $11, with temporary peaks as high as $30.
In contrast to the decreasing transaction fees, the market cap of PEPE has experienced a significant drawdown. Over the past month, it has dropped from $1.15 billion to $450 million, reflecting a decline in interest and investor sentiment. Despite listing support from prominent crypto exchanges, including Binance, the price of PEPE has plummeted by over 60% during the same period.
Similarly, the Bitcoin network’s memecoin frenzy, led by Ordinals’ inscriptions, has also faded in recent weeks. As a result, transaction fees on the Bitcoin network have returned to levels last seen in mid-April. The decrease in both Ethereum and Bitcoin transaction fees indicates a cooling off of the memecoin trend and a return to more sustainable levels of activity on these blockchains.
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