Ethereum Fees Take a 70% Dive as Self-Custody Adoption Gains Momentum
- Carleton Nitzsche
- June 1, 2023
- Ethereum, Crypto, News
- Crypto, ETH, Ethereum, Self Custody
- 0 Comments
Newly released data suggests that self-custody has experienced a notable surge while Ethereum fees have plummeted by 70%. After hitting a peak of $14 per ETH transaction in May, the average Ethereum fees have now decreased to $4.3, returning to their usual levels.
Ethereum users have been struggling with high transaction costs for a long time. Thus, the recent reduction in fees has brought a sense of relief to them. The drop in fees can be attributed to the recent market downturn, which has caused the broader cryptocurrency market to decline from its recent record-breaking levels.
Not only have Ethereum users benefited from the decrease in fees, but self-custody has also become increasingly popular. A growing number of users are choosing to possess their private keys rather than depending on centralized exchanges, driven by concerns about security and privacy. Self-custody is a crucial component of decentralized finance (DeFi), which aims to create a more transparent and accessible financial system.
Reasons for Ethereum Fees Decline
Multiple factors have contributed to the decline in Ethereum fees. The market’s recent downturn has caused a significant drop in transaction fees, with Bitcoin and Ethereum experiencing decreases of 71% and 81%, respectively.
Additionally, there has been a reduction in demand for Ethereum transactions, resulting in a decrease in gas fees. The decrease in demand can be attributed to several factors, including the recent decline in the NFT market. Furthermore, the rise in self-custody may have also contributed to the decrease in demand for Ethereum transactions.
Ethereum Vs Bitcoin Gas Fees
Directly comparing Ethereum gas fees and Bitcoin transaction fees won’t make much sense since they operate on separate systems. Ethereum gas fees are determined by the complexity of contract code execution and settled in gas, while Bitcoin transaction fees are solely based on the transaction size. However, it is worth noting that historically, Ethereum gas fees have been higher than Bitcoin transaction fees.
Earlier, Messari.io’s chart for monitoring cryptocurrencies displayed that Ethereum’s gas fees had an average of $24. In comparison, Bitcoin’s highest average fee for a single transaction was $63 in April. It’s important to note that Ethereum’s gas fees are usually higher than transaction fees on other blockchains due to the network’s intricacy. However, this intricacy also grants Ethereum greater versatility and adaptability for a wider range of applications.