Ethereum has experienced a huge increase in gas fees: here’s why.

Ethereum's median gas price rose to 55.3 Gwei this month, potentially doubling within a month, and is at its highest level since mid-May this year.

Ethereum is trading at 2,230, 10% last week and 81.3% last year, remaining the second most popular crypto after Bitcoin.

Table of Contents

Toggle

Ethereum gas fees have increased.

As noted in an analysis on Dune, Ethereum gas fees have increased over the past month. In the year In October 2023, Ethereum experienced a significant drop in gas payments, reaching new lows. The decline was caused by the decline in activity of decentralized finance (DeFi), non-perishable tokens (NFTs) and various Telegram bots.

Major gas spenders such as Binance and Coinbase and Layer-2 networks such as Arbitrum, Optimism and Base reduced their expenses by 30% in mid-October.

However, on December 1, the introduction of the NFT collection of Buterin cards led to a 13% increase in gas fees on the Ethereum network. Transactions related to this collection have accumulated a total payout of 318.31 ETH in the last 24 hours, which is equivalent to $665,670.

Specifically, within three hours, transactions related to the Buterin Cards NFT project contributed more than 13% of the total Ethereum network gas payments, more than Uniswap's universal router address and Tether's public address payment, according to data from Etherscan.

Ethereum gas fees have become volatile

Following the network's transition to the Proof-of-Stake (PoS) consensus mechanism implemented through Ethereum 2.0, there has been a significant drop in Ethereum gas fees.

It moved away from the power-intensive Proof of Work (PoW) model by introducing staking and resulting in an incredible 99.9% reduction in energy consumption.

Ethereum Gas fees have consistently reflected demand on the network throughout its history. In particular, Ethereum experienced an unprecedented surge during the initial coin offering (ICO) boom of 2017 and the decentralized finance (DeFi) explosion of 2020. The high demand during these periods has resulted in significant increases in gas bills, forcing consumers to pay sometimes higher amounts to process their transactions faster.