According to Token Terminal, Ethereum’s daily transaction costs have reached their lowest level since September 2024.
Ether’s network fees have now fallen below $1 million for just the second time since November 2020.
On February 8, Ethereum’s fee revenue dropped to $731,472, marking the lowest point in five months and the first instance of fees falling below $1 million.
The last time this happened was in November 2020.
Unlike Bitcoin, Ether (ETH) has failed to reach new peaks over the past year, despite the introduction of spot ETFs in major financial hubs like the US and Hong Kong. This failure has frustrated investors.
The cryptocurrency industry has experienced widespread declines due to worsening trade disputes. However, Ether’s price struggles stem primarily from its increasing supply.
Ethereum’s supply has climbed since April 2024, ending the deflationary period triggered by the September 2022 Merge. The total supply now exceeds pre-Merge levels.
The Merge eliminated Ethereum’s mining-driven issuance, which previously contributed to high supply inflation.
In August 2021, Ethereum developers introduced the London hard fork, which burns a portion of transaction fees. When network activity is high enough to burn more ETH than the network issues, this mechanism makes ETH deflationary.
Ethereum’s layer-2 solutions have helped mitigate congestion and stabilize fees on the mainchain, but they have also caused a migration of activity away from the core blockchain.
These layer-2 solutions continue to struggle with interoperability, raising fears that fragmentation may threaten the Ethereum ecosystem.
Other blockchain networks have gained momentum. Tron has emerged as a top choice for stablecoin transactions, while Solana has expanded as a thriving DeFi hub, particularly in the memecoin market.
Token Terminal data shows that in the past three months, both networks have generated more fees than Ethereum.
Beyond onchain challenges, conflicts within the Ethereum Foundation have increased uncertainty about the network.
After facing conflict-of-interest concerns regarding EigenLayer and criticism of executive director Aya Miyaguchi, Vitalik Buterin took exclusive leadership of the Ethereum Foundation in January.
Despite market uncertainty, Ethereum bulls have remained confident. On February 7, CryptoQuant data revealed that accumulation addresses purchased 330,705 ETH ($833 million), marking the largest daily inflow ever recorded.
