Ethereum, the world’s largest programmable blockchain and the parent platform of the world’s second-largest cryptocurrency ether (ETH), has seen its total daily fees drop to 1,719 ETH ($2.8 million) on Sunday – the lowest single-day total since Dec. 26, according to data tracked by South Korea-based blockchain analytics firm CryptoQuant. This is a 89% decrease from the year-to-date high of 16,720 ETH observed on May 5.
The decline in fees paid represents low network usage, as fees are determined by the level of activity in the network, mainly the number of pending transactions. This eight-month low in fees is likely due to the rising popularity of Ethereum layer 2 scaling solutions, which is a long-term positive development for Ethereum. David Lawant, head of research at FalconX, said in a note last week: Ethereum L1 fees since friends.tech launched on August 10 are 25% lower than the average for the year until then, which is in stark contrast to the times when the success of early NFT application CryptoKitties or the latest Yuga Labs NFT drop would commonly temporarily clog the Ethereum network.
Friend.tech debuted on Aug. 1, gaining over 100,000 users and accumulating more than $25 million in revenue within two weeks. Layer 2 scaling solutions like Optimism, Arbitrum and Base help scale Ethereum, alleviating congestion and keeping transaction costs under check on the main network. According to analytics firm IntoTheBlock, the number of daily transactions on Optimism Mainnet hit a new all-time high of nearly 900,000 transactions on Aug. 15. Further, the number of transactions processed between Ethereum mainnet and the major layer 2s using optimistic rollup technology hit their second largest value in history early this month.