TL; DR
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At the time of writing, gas costs are up ~$0.25 for sending ETH via the protocol; and a trade on Uniswap currently costs $2.47 – down from $4.17 in early September – a price not seen since the collapse of FTX in October 2022.
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There are three main theories as to why Ethereum gas rates are so low right now.
Full story
We’ve talked about “gas fees” before, but to set the stage for this story, it’s important to know that gas fees are essentially transaction fees incurred by users to offset the computing power used to process each transaction.
Ethereum was implemented in August 2021 EIP-1559.
Sounds complicated, but all it really means is that a fee-burning mechanism has been introduced, so that the higher gas prices are, the more ETH is burned (i.e. permanently destroyed) and vice versa.
At the time of writing, gas costs are up ~$0.25 for sending ETH via the protocol; and a trade on Uniswap currently costs $2.47 – down from $4.17 in early September – a price not seen since the collapse of FTX in October 2022.
So, why the falling gas prices?
There are so many variables in markets that they are extremely difficult to understand. But here are some theories.
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The Optimist: The upgrades like EIP-1559 and The Merge have had tremendous benefits for the network, making it cheaper and more secure, leading to lower gas prices.
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The Neutralist: Layer-2 scaling protocols (e.g. Polygon) have been so successful that they have taken significant trading volume away from the Ethereum protocol. Crypto is still fine and dandy, people are just opting for other protocols powered by ETH, rather than ETH itself.
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The Pessimist: Investors are waiting for the next big thing in crypto. Until then, liquidity will remain low and gas prices will continue to fall, simply due to less and less demand.
The truth is, it’s probably a combination of all of the above.
Is this a good time to transact on the Ethereum network?
That really depends on whether you adopt a ‘glass half full’ or a ‘glass half empty’ view.
¯\_(ツ)_/¯
