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- Ethereum fees have continued to drop and are now 80 percent lower than they were two months ago, giving more people the chance to indulge in DeFi and NFTs.
- A report found that staking surged in the last quarter of 2021, with 7.7 percent of all cryptos now staked, and Ethereum is leading this sector, but the price has yet to break out.
One of Ethereum’s biggest criticisms has been its inability to scale, which inevitably leads to sky-high fees. At some point towards the end of 2021, it cost as much as $60 to make a transaction on Uniswap, inhibiting many from taking part in DeFi. Since then, these fees have dropped by up to 80 percent, affording many the opportunity to engage in DeFi and mint NFTs. However, the price has yet to break out and at press time, ETH had lost 3.5 percent in the past week.
Data from BitInfoCharts shows that the average Ethereum transaction costs 0.0043 ETH, or $11.38. This is the lowest it has been since early September. Incidentally, ETH price at the time was hovering around $2,600, the same price it’s changing hands today. This was also before the biggest altcoin went on a price surge that took it to its all-time high of $4,860 in November.
As recently as January 10, the Ethereum fees were as high as $52 and have dropped by 80+ percent since.
It costs way less to transact on Layer 2 networks. As the Ethereum fees have dropped, L2 fees have dipped too to their lowest level in months.
The cheapest L2 is Loopring, the open-source exchange protocol that allows its users to build non-custodial, order book-based exchanges on Ethereum by leveraging zero-knowledge proofs. It costs just $013 to send ETH on Loopring at press time and $0.66 per swap.
Related: Loopring shot up 900% in two weeks – what is it and why is it surging?
Other L2 projects with low fees include ZKSync at $0.16, Arbitrum One at $0.56, Boba Network at $0.99, and Optimism at $1.24.
While the fees on Ethereum are much lower than they were a few months ago, they are still much higher than on most networks, including Bitcoin. On the top crypto network, it costs just $1.2 to send BTC. It costs even lower to use other chains like Binance Chain, XRP, Terra, Cardano, Solana and Avalanche.
These prohibitive fees have continued to be the biggest deterrent for DeFi, NFT and staking fans. With this said, all these sectors shot up in the last quarter of 2021, despite the high fees.
At press time, there’s $197 billion locked in DeFi platforms according to data from DeFiLlama. A report by Staked.us reveals that staking surged in the last quarter as well, with the annualized staking rewards in 2021 shooting to $15 billion, as Ethereum dominated.
Staked.us CEO Tim Ogilvie expects this growth to continue, commenting:
Sure, I count on this may improve considerably, pushed by elevated Ethereum staking. The ‘merge’ [when the current Ethereum Mainnet “merges” with the beacon chain PoS system], which is ~6 months away, will improve the returns to ETH stakers by paying them the information included in blocks.
At press time, ETH is trading at $2,612, down by 3.5 percent for the day and 4.6 percent for the week as the larger crypto market dipped over the weekend.
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