Ethereum Gas Fees Plummet 70%: L2 Solutions Drive Decline

Ethereum gas fees have plummeted by 70%, reaching a four-year low, according to data from IntoTheBlock. The average gas price has dropped to around 5 gwei, translating to roughly $0.80 per transaction, a stark contrast to the $20-plus fees seen during peak activity in 2024. This significant decline has left analysts and users wondering about the driving forces behind this drop.

The primary factors contributing to this decline are the surge in Ethereum Layer 2 (L2) solutions and a decrease in mainnet network activity. The rise of L2 solutions like Arbitrum, Optimism, and Base has offloaded transactions from the mainnet, reducing congestion and lowering fees. These L2 networks now handle over 1.5 million daily transactions combined, up from 800,000 a year ago. Following the Dencun upgrade, which introduced "blobs" to reduce L2 data costs, gas fees on these networks have dropped by as much as 90%, with some costing mere cents.

For instance, Arbitrum's average fee is now $0.15 compared to $2 before the upgrade. This cost efficiency has siphoned activity from the mainnet, easing congestion and slashing fees. Rollups, Validiums, and Optimiums also contribute to this trend by periodically posting state commitments of transactions that are validated by Ethereum, further reducing activity on the mainnet.

Meanwhile, ETH's mainnet has witnessed a slowdown, with daily transactions declining from 1.2 million in January 2024 to just over 900,000 in February 2025. This dip aligns with volumes on decentralized exchanges (DEXs) falling to $2.62 billion daily, down from a 2024 peak of $5 billion. The waning hype around memecoins and speculative NFT drops has further softened demand for block space. Since the Dencun upgrade, ETH issuance has exceeded burns by 197,000 ETH, or $500 million, indicating decreased fee pressure.

Cheaper transactions could potentially spur adoption, but there is also the potential for challenges as L2 fragmentation might dilute liquidity. As L2s like Base continue to thrive, Ethereum's mainnet may evolve into a security