Ethereum network gas fees drop to just 0.067 Gwei amid slowdown
News Summary
Ethereum Layer-1 blockchain gas fees have plummeted to just 0.067 Gwei following a historic market crash in October 2025. The average cost for executing a swap on Ethereum is now $0.11, NFT sales carry a fee of $0.19, bridging a digital asset costs $0.04, and onchain borrowing is $0.09. While low transaction fees offer cost-effective opportunities for investors, analysts and crypto industry executives warn that excessively low fees could spell trouble for the Ethereum ecosystem. They argue that such low fee levels are unsustainable for any blockchain network and present financial and security challenges due as they reduce the revenue needed to incentivize validators to process transactions and secure the blockchain. Ethereum's base layer has seen a 99% revenue decline since the Dencun upgrade in March 2024, which significantly lowered transaction fees for Layer-2 scaling networks. Critics suggest that excessively low fees could also signal users are migrating away from the network. Research from Binance indicates that Ethereum's scaling strategy, which relies on Layer-2 networks, is a double-edged sword: while it enhances scalability, it also 'cannibalizes' revenue from the base layer, creating additional competition within Ethereum's own ecosystem.
Background
Ethereum stands as the second-largest cryptocurrency by market capitalization and a pivotal Layer-1 blockchain, where transactions incur 'gas fees.' These fees are payments made by users to validators for processing transactions and incorporating them into the blockchain. Gas fee levels are a direct indicator of network demand and congestion. During the 2021 bull run, Ethereum gas fees surged to $150 or more, imposing substantial costs on users. To address scalability and high fee issues, Ethereum has been actively transitioning towards a Layer-2-centric scaling strategy. The Dencun upgrade in March 2024 was a crucial step in this strategy, designed to enhance overall network efficiency and user experience by reducing transaction costs on Layer-2 networks, though this move has also profoundly impacted Layer-1's revenue model.
In-Depth AI Insights
What are the broader implications of sustained low Ethereum gas fees for its long-term economic model and competitive positioning? - Reduced validator incentives could, over time, compromise network security, making it less attractive for high-value transactions and ultimately impacting its credibility as a global settlement layer. - The Layer-2 scaling strategy, while boosting throughput, appears to be a zero-sum game for Layer-1 revenue, potentially creating an existential crisis for the base layer's economic sustainability. - This revenue cannibalization could weaken Ethereum's ability to fund core development and attract top talent, shifting value capture towards Layer-2s. Does the current low-fee environment signal diminishing competitiveness for Ethereum in the broader crypto market, and how might this influence institutional investor perception? - Persistently low fees, especially amid a market slowdown, could be interpreted as a signal of declining user demand, raising concerns about Ethereum's network effect. - Institutional investors might become wary of the fragility of the Layer-1 revenue model, particularly given the potential trade-off between security and fee incentives, leading them to re-evaluate Ethereum's status as a long-term store of value or core infrastructure. - The internal competition model, if Layer-2 solutions fail to sufficiently route value back to the mainnet, could be perceived as a significant structural weakness, deterring new capital inflow. Given declining revenue and internal competition, what are potential strategic adjustments or future directions for Ethereum? - The Ethereum Foundation may need to explore new economic models or fee structures to ensure long-term incentives for Layer-1 validators and network security. - More sophisticated value routing mechanisms or incentive programs might emerge to align the economic interests between the Layer-1 and Layer-2 ecosystems. - Additionally, Ethereum might need to more clearly define its role as a 'settlement layer' rather than an 'execution layer' and attract users and value through stronger application-layer innovation, rather than direct transaction fees.