• Ethereum transaction fees have seen a sharp decline over the past week, falling by around 35%.
• On-chain analytics firm Santiment’s data indicates that the average fee has been elevated in recent days due to a congested mempool.
• The spike in fees occurred when Ethereum’s price fell below the $2,000 mark.
Ethereum Transaction Fees Drop By 35%
On-chain data shows the average Ethereum transaction fees have seen a sharp drop after hitting 11-month highs just last week. According to data from the on-chain analytics firm Santiment, the fees hit very high values when the asset’s price plunged below the $2,000 level about a week ago.
Average Fees Elevated From Congested Mempool
The indicator of interest here is the “average fees,” which measures the average amount of fees (in USD) that investors are attaching to their transactions right now. This metric’s value is mainly affected by the density of traffic that the Ethereum network is receiving currently. When a large number of transactions are taking place at once, the mempool (the place where transfers wait to be added to the block) may get congested. During such times, a lot of transfers can get stuck in waiting as the network validators naturally prioritize transactions carrying high fees. Investors that want to get their transfers through faster then begin to attach a higher amount of fees with them. Other holders may then also try to outcompete these high fees transactions by attaching even larger amounts, and so, in this way, the average fees can quickly blow up.
High Fees When Price Drops Below $2000
This is only true when the mempool is congested because when blockchain is receiving little traffic there isn’t much incentive for investors to attach any significant amount of fee since network has enough capacity to handle all sorts of transaction quickly enough. The spike in fee happened when Ethereum’s price fell below $2000 mark and not uncommon for fee’s exploding during such volatile price action like this as investor usually rush making their moves whether buying or selling thus congesting mempool
Chart Showing Trend In Average Fees Over Past Months
As shown in chart above it was quite evident how fee surged reaching pretty high values around week ago when price had started sliding off below $2000 mark it was quite evident how fee surged reaching pretty high values around week ago when price had started sliding off below 2000 mark and not uncommon for fee’s exploding during such volatile price action like this as investor usually rush making their moves whether buying or selling thus congesting mempool .
Conclusion
In conclusion it can be said that cryptocurrency market volatility often leads to an increase in network transaction activity which results in increasing fees if users are looking for faster processing times and confirmations on blockchain networks , however with current trend going downwards we can say ethereum average transaction cost has dropped significantly from its peak