Ethereum, the largest altcoin seems to have done the overdue homework regarding its fee structure. Ethereum network fees plummeted in May, below $10 per transaction. Likewise, cheaper fees on layer one (L1) made layer two (L2) fees between $0.02 and $1.13 per transaction.
ETH: Down under
Santiment’s on-chain metrics on transaction fees show that Ethereum’s transaction fees have been reducing constantly since November 2021. At present, ETH’s average fee costs traders just $2.54 per transaction. As per Santiment, this is the lowest ETH cost level since July.
Ethereum’s shift to the Proof of Stake (PoS) consensus, indeed, played a vital part in the said decline. This shift is meant to hugely drop transaction fees by killing off all the parallel chains feeding off the crumbs.
Last year, the network began implementing the Ethereum Improvement Proposal (EIP) 1559. That created a new system under which transaction fees, once paid to miners would split into a base fee and a tip to the miner. Now the miner gets the tip, but the base fee is burned or destroyed. Ergo, directly affecting the circulating supply.
— glassnode alerts (@glassnodealerts) May 25, 2022
Overall, taking one step closer to reaching the “deflationary” status. This might indeed fuel ETH’s prices given the growing adoption of the largest altcoin.
Notably, on-chain data shows that Ethereum has been under strong accumulation recently. The whale group of addresses holding anywhere between 10k and 100k ETH in their wallets have grown their balance from 28.3m of ETH in March to 29m of ETH as of date.
It means the whales purchased more than 700K ETH worth nearly $1.4 billion. These whale addresses currently hold nearly one-fourth of the total ETH supply.
Pulling the trigger?
Now the question is- What does this imply for the price given the fee structure? Historically, as can be seen from the chart, Ethereum’s price rose whenever the average gas fee dipped below $5.
The above news may cause many in the crypto space to celebrate, especially those who hold ether.
For instance, remember GameStop?
Video game retailer has unveiled a digital asset wallet for storing, sending, and receiving crypto and NFTs ahead of the launch of its NFT marketplace later this year. A beta version of the self-custodial Ethereum wallet is available on GameStop’s website.
🎮 #Gamestop's digital asset wallet, which allows gamers to circulate #crypto and #NFT's on browsers, caused a social volume surge Monday. The $ETH-based wallet has received positive, to sarcastic, to hateful reactions, and is polarizing to say the least. https://t.co/HT0M3q3i5E pic.twitter.com/tjuEdndYyG
— Santiment (@santimentfeed) May 24, 2022