Ethereum Gas Fees Drop to Lowest Levels in 2023, Triggering Inflationary Shift

Crypto News– According to data from Coin Metrics, Ethereum transaction fees have recently dropped to levels reminiscent of those seen in 2022. This decline in fees is attributed to a reduction in on-chain activity related to NFT sales, meme coin trading, and the use of Telegram bots.

Ethereum Gas Fees Drop to Lowest Levels in 2023, Triggering Inflationary Shift

Currently, the average fee for Ethereum transfers has settled at $1.83, while the cost of exchanging tokens on Uniswap is approximately $4.17, as reported by Etherscan. These fee levels have not been witnessed since November of the previous year, coinciding with the FTX incident. This decrease in demand for gas on the Ethereum network has caused Ethereum to enter an inflationary phase, a phenomenon observed only a few times since the Merge in September 2022.

Over the past week, the supply of Ethereum has grown by 4,092 ETH tokens, equivalent to approximately $6.6 million, as indicated by Ultrasound.money data.

Anticipating the Forthcoming On-Chain Storyline

At the beginning of 2023, Ethereum’s on-chain activity experienced a surge, driven in part by a substantial increase in NFT trading volumes, fueled by the frenzy surrounding the Blur token airdrop and the rising price of ETH.

The rate of Ethereum burning also intensified during the second quarter, coinciding with the hype around meme coins.

However, Ethereum’s supply has remained relatively stable since then, as on-chain activity has subsided, with a minor uptick observed in September. According to Martin Lee, an analyst at Nansen, “Daily active addresses and transactions have shown minimal change over the past year, with active addresses hovering around ~400,000, and transactions around ~1 million.“

One noteworthy shift in recent months, as pointed out by Lee, is that “the primary consumers of gas have shifted toward DeFi-related activities, with a decline in NFT-related gas consumption.”

NFT sales volumes have failed to regain momentum since the second quarter of this year. Data from Crypto Slam indicates that the number of unique wallets engaged in buying and selling NFTs has decreased by more than threefold compared to previous years.