In a significant development for the Ethereum network, average transaction fees have witnessed a sharp decline. This plunge comes shortly after the Ethereum network recorded a significant spike in fees in May driving it to a yearly high.
According to the latest data from the popular market intelligence platform Santiment, Ethereum fees have now settled somewhere below $5 from the yearly high of above $10 per ETH transaction in early May. It is worth noting that this latest update marks a positive shift for Ethereum users and the broader ecosystem.
The Return To Normalcy: Ethereum Fees Reclaim Stability
On the last day of May, Santiment data revealed Ethereum fees have dropped by roughly 69% from their yearly high of $14 per ETH transaction in early May. The data shows ETH fees have now settled at $4.28 per transaction in the past hours.
Notably, the surge in Ethereum fees during the meme coin frenzy, fueled by the popularity of the frog-themed meme coin Pepe (PEPE) token, had initially led to inflated transaction costs for Ethereum users.
However, recent data highlights a welcome reversal of this trend, with fees plummeting back to more reasonable levels. The 69% decrease in transaction fees over a mere 25-day period signals a positive outlook for Ethereum’s network adoption and user engagement.
According to the Santiment team, the decline in fees is a promising sign that Ethereum is becoming more affordable for users, consequently encouraging greater utility and activity within the network.
Lower transaction costs not only attract new users but also incentivize existing participants to make full use of Ethereum’s capabilities.
As fees normalize, it paves the way for enhanced accessibility, making Ethereum a more considerable platform for various applications, including decentralized finance (DeFi), non-fungible tokens (NFTs), and more.
Self-Custody Trend And ETH Supply
Another noteworthy trend accompanying the fee reduction is the declining percentage of Ethereum supply held on crypto exchanges. Recent data also from Santiment reveals that the Ethereum supply on exchanges has reached an all-time low of 10.31%.
This decrease is a result of the growing preference for self-custody solutions among Ethereum holders due to security concerns related to centralized exchanges. Additionally, regulatory uncertainties surrounding the classification of ETH as a security or commodity have contributed to this shift.
For context, Self-custody refers to the practice of holding one’s assets in secure wallets and personal accounts rather than relying on third-party exchanges. The increased self-custody of ETH indicates a rising level of confidence among holders and a desire to retain control over their digital assets.
This development aligns with the ethos of decentralization and further strengthens Ethereum’s position as a trusted and secure platform for value transfer and smart contracts.
The combination of lower transaction fees and the rise of self-custody underscores Ethereum’s growing maturity and resilience as a blockchain network. These developments not only foster confidence among existing users but also attract new participants to join the Ethereum ecosystem.
Meanwhile, ETH hasn’t shown any noteworthy spike in the past weeks aside from a 4.3% increase over the past 7 days. The second crypto asset by market capitalization has surged nearly 5% in the past week. And over the past 24 hours, ETH has seen a 0.4% loss in value.
At the time of writing, Ethereum currently trades at $1,860 as its trading volume has also plummeted from nearly $8 billion last Thursday to $6.4 billion in the past 24 hours.
Featured image from Shutterstock, Chart from TradingView