- The average cost of settling transactions over the week was just $1.13.
- ETH holdings continued to leave exchanges for self-custody.
Once notorious for charging high fees for processing transactions, the Ethereum [ETH] blockchain became unexpectedly cheap to use in recent days.
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Ethereum becomes super affordable
As per on-chain analytics firm Santiment, the gas fees plunged to levels not seen in nearly a year. The average cost of settling transactions over the week was just $1.13, a massive drawdown from the peaks attained earlier in May.
Source: Santiment
L2 networks playing their part
The marked decline in transaction fees was majorly driven by the increased adoption of layer-2 scaling solutions. Blockspace demand for L2s hit the roof in 2023 with users flocking to capitalize on its relative cost and efficiency advantages.
According to L2Beat, transaction activity on scaling solutions witnessed a metaphoric rise in 2023. In fact, the average transactions per second (TPS) on L2s was 5.78 times more than Ethereum over the last week.
Source: L2Beat
In essence, L2s were delivering on what they were originally intended to do – relieve Ethereum from the on-chain transaction load and assist in its scaling.
Santiment noted that lower gas fess could boost Ethereum network’s utility, attracting more decentralized applications and smart contracts. In turn, it could exert upward pressure on ETH coin in the days to come.
However, there has been no appreciable change in ETH’s value of late. The coin had been range bound over the last week, according to CoinMarketCap, exchanging hands at $1,635 as of press time.
ETH’s liquid supply plummets further
The indifference could be attributed to the continuing flight of ETH holdings out of centralized crypto exchanges. According to Santiment, 4 October saw the largest outflows in over six weeks, with over 110,00 ETH tokens exiting the liquid supply.
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Source: Santiment
With the latest departure, ETH’s liquid supply tanked to 10.6 million, its lowest in five and a half years. On the other hand, ETH supply in self-custody surged to its all-time high of 115.8 million. This equated to 96% of all ETH coins in circulation at the time of writing.
Meanwhile, investors continued to be bullish on ETH’s long-term prospects as reflected by the positive weighted sentiment for the asset.
Source: Santiment
