Ethereum Gas Prices Hit Record Low Amidst Struggles Post-Dencun Upgrade

• Ethereum gas prices hit an all-time low of 2.9 Gwei, driven by the Dencun upgrade effects.
• The Dencun upgrade significantly reduces fees, shifting usage to Layer 2 networks like Arbitrum.
• Despite ETF approval, Ethereum’s price falls 35%, with ETH supply up by 197,000 ETH.

Ethereum’s gas prices have plummeted to an unprecedented low, marking a significant shift in the network’s dynamics since the Dencun upgrade. This development, reported by CryptoQuant on their X account, highlights the impact of recent changes on the Ethereum ecosystem, particularly concerning transaction fees and the network’s overall performance.

Ethereum’s daily average gas price dropped to a record low of just 2.9 Gwei, showing that transaction costs on the network are decreasing. Along with this, Ethereum’s daily average fees have fallen to a multi-year low of $0.85.

The fee decline has led to a corresponding decrease in the network’s daily mean burn rate, with only 115 ETH burned in a single day. Despite these reductions, Ethereum’s daily transaction volume has remained stable, even showing a slight increase compared to the same period over the last two years.

The Dencun upgrade, activated on March 13, has played a pivotal role in these changes. The introduction of “Blobs,” a new type of transaction, has allowed Layer 2 networks like Arbitrum, Base, and Optimism to publish their data on Ethereum at a significantly reduced cost, potentially lowering fees by up to 100%. 

While this development is advantageous for users, offering them lower transaction costs, it raises investor concerns. The shift of a substantial portion of Ethereum’s usage to Layer 2 networks may lead to user and liquidity fragmentation challenges, potentially affecting the network’s overall stability.

Despite the recent approval of Ethereum ETFs, the price of Ethereum has continued to decline. Since the Dencun upgrade, ETH supply has increased by over 197,000 ETH, equivalent to more than $500 million. 
Concurrently, Ethereum’s price has dropped by 35%, with the live price currently at $2,588.36, a 2.95% decrease over the last 24 hours. This price drop underscores the challenges Ethereum faces despite the network’s ongoing developments and ETF approvals.