Bitrabo Editorial
Recent data indicates a rise in transaction fees on the Ethereum network. Let’s explore the factors contributing to this development.
Recent Surge in Ethereum Average Fees
A recent analysis by the on-chain data company Santiment highlights a noticeable increase in transaction costs on Ethereum. The focus is on the “Average Fees,” which reflect the typical charges users opt for their ETH transactions.
The fees that senders are willing to pay depend on how active the blockchain is. During periods of high transaction volume, some transfers may experience delays due to Ethereum’s limited processing capacity. To ensure quicker transactions, users often choose to pay above-average fees.
This competitive dynamic among users determines the overall average fee. Conversely, during low activity periods, senders tend to opt for the lowest fees since there’s less urgency to expedite transactions.
Below is a chart illustrating the trend of Ethereum’s Average Fees over recent months:
The chart indicates that the current Ethereum Average Fee has risen to $3.2, marking its peak since early August. Although there was a significant spike in fees during August, it was short-lived.
This earlier surge in fees happened alongside a market dip, caused by panic selling among investors rushing to execute trades quickly.
Before this recent spike, the last prolonged increase in fees occurred in late May. Thus, the latest fee level represents the highest in a four-month period.
One obvious driver for this recent increase in fees may be the asset’s price rally, which tends to attract more users and raises average fees.
However, a closer look at the fee distribution reveals that ordinary Ethereum traders might not be the primary contributors to this rise.
Interestingly, Wrapped Ethereum (WETH) has emerged as the main contributor to network fees. According to Santiment:
The prominence of WETH in fee contributions suggests that traders are actively using decentralized finance (DeFi) platforms, likely involving activities like liquidity provision and trading with WETH as a fundamental asset.
Current ETH Price
As of now, Ethereum is trading around $2,700, reflecting a 5% increase over the past week.