Ethereum fees have come down significantly, but don’t expect the merge to solve the network’s scaling issues
According to data provided by blockchain data platform Dune Analytics, Ethereum’s seven-day average fee hit an all-time low in 2022, plunging to just 16.98477 Gwei (about $7.51 at the time of the press).
During the bull market of 2021, the Ethereum network had been consistently plagued by exorbitant fees, which averaged at roughly $40. This made the blockchain unaffordable for the average Joe, which led to the rise of alternative platforms such as Solana.
Ethereum fees remain relatively low despite the fact that the price of the major cryptocurrency has seen a substantial rise over the past month. On Sunday, the price of Bitcoin jumped to $1,664, the highest level since early June, before heading back lower.
Will the merge reduce gas fees?
The recent price spike came on the cusp of the hotly anticipated merge upgrade, which will allow the network to transition to the proof-of-stake algorithm.
While Ethereum 2.0 will consume significantly less power compared to the compute-intensive proof-of-work iteration of the second-largest cryptocurrency, the merger will not reduce gas fees upfront.
Earlier this month, DeFi trader Vivek Raman explained that fees are not a function of the consensus mechanism. Hence, users will still have to use other Layer-2 solutions in order to spend less money on transactions.
While the Ethereum 2.0 upgrade was originally supposed to come with “sharding,” the technology that splits the main chain into multiple shards, this is no longer the case. Therefore, the merger will not really solve network scaling problems by speeding up transactions and reducing fees.
