Ethereum's Gas Price Plummets: Layer 2 Solutions Reshape Network

Ethereum's average gas price has plummeted to around $0.80, signaling a significant shift in its transaction landscape. This dramatic decrease is attributed to a surge in Ethereum Layer 2 solutions, which are effectively alleviating congestion on the main network by processing off-chain transactions. The movement towards Layer 2 is reshaping how users interact with Ethereum, as noted by a recent COINOTAG analysis.

The Ethereum blockchain, a cornerstone of numerous decentralized finance (DeFi) projects and non-fungible tokens (NFTs), has seen its average gas price plummet to around 5 gwei or approximately $0.80 per transaction. This marks an astounding decrease from the record fees exceeding $20 during peak activity periods. This drop signifies a profound transition in user dynamics, with Ethereum’s daily fees witnessing a dramatic fall from $23 million to $7.5 million as of February 20. According to data from IntoTheBlock, the average cost for executing transactions on the network now sits at under $1 — a stark contrast to previous highs that plagued users.

The ascension of Layer 2 solutions, such as Arbitrum, Optimism, and Base, has been pivotal in driving down transaction fees on Ethereum. These platforms enable off-chain processing, allowing Ethereum to scale effectively while maintaining security. The various L2 networks now facilitate over 1.5 million daily transactions, a staggering rise from 800,000 a year ago, which significantly alleviates congestion on the Ethereum mainnet. Following the Dencun upgrade, which introduced new functionalities to improve cost efficiency, gas fees on these networks saw reductions of up to 90%. For instance, the current average fee for transactions on Arbitrum has dropped to just $0.15, down from an average of $2 pre-upgrade.

Amid this efficiency, Ethereum’s mainnet has experienced a marked decline in network activity, dropping from 1.2 million transactions daily in January 2024 to just over 900,000 in February 2025. This shift aligns with a notable decrease in trading volumes on decentralized exchanges (DEXs), which fell from a peak of $5 billion daily to around $2.62 billion. The waning interest in speculative ventures such as memecoins and frequent NFT drops