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Ethereum gas fees have dropped to their lowest levels in over four years, coinciding with the recent Dencun upgrade in March. This decline in fees has led to an inflationary trend in Ethereum’s supply, with projections indicating a new high for 2024 within the next six days if the trend continues.



As of June 22, the average Ethereum gas fee fell to $1.34, the lowest since April 2020, according to BitInfoCharts. In terms of gwei, the gas price dropped to 1.9 gwei, the lowest in more than five years, as reported by Dune Analytics.

The significant reduction in gas fees has resulted in Ethereum’s supply becoming inflationary since early April. With base transaction fees—burned by the network—decreasing, more than 44,500 ETH have been added to the supply over the past 30 days, leading to an annual growth rate of 0.45%, according to Ultra Sound Money. Since April 5, nearly 109,500 ETH have entered circulation, bringing the total supply to approximately 120,173,000 ETH, with around 13,000 ETH being added weekly.

Interestingly, the decline in gas fees has not led to a significant drop in transaction volumes. Data from Etherscan shows daily transactions fluctuating between 1.1 million and 1.3 million since mid-March, similar to the range when 85,000 ETH were burned in late 2022. On June 22, there were over 1.31 million transactions, the highest daily count since April, despite the low gas fees.

The Dencun upgrade, activated on March 13, is credited with improving the efficiency of transactions on Layer 2 (L2) solutions and reducing costs associated with posting L2 transactions to the Ethereum mainnet. This upgrade replaced gas-intensive calldata with binary large objects (blobs), significantly lowering fees. For example, on March 5, top L2 networks paid between $262,000 and $601,000 in daily fees to Layer 1, whereas in May, they paid between a few hundred dollars and $7,500.

This substantial reduction in L2 transaction costs has played a key role in Ethereum’s recent decline in gas fees and the burn rate of ETH.

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