The average fee paid to transact on the Ethereum network has plummeted this week, after it hit a new all-time high of $14.5. The average transaction fee started dropping along with the price of the cryptocurrency.
According to data from BitInfoCharts, on September 2 the average transaction fee to move funds on the Ethereum network was $14.5. During that day, CryptoCompare data shows ETH’s price started dropping from a near $480 high to $430.
As the price of the cryptocurrency started dropping so did the average fee paid to move ether on the blockchain, to $11 the next day, and to $7.5 on September 5. At press time, BitInfoCharts shows that the average transaction fee on Ethereum is $2.71, a drop of over 80% from the all-time high seen a week ago.
Similarly, the price of ETH dropped to a $330 low this month, but recovered to $340 at press time. It’s worth pointing out that the transaction fee drop doesn’t coincide exactly with the price drop, as the average transaction fee went up on September 6, when ether’s price hit its $330 low.
The Ethereum network’s high transaction fees are caused by the growing interest in the decentralized finance (DeFi) space and yield farming trend it created. Users are paying for transactions on ETH to lend and borrow funds from DeFi protocols to earn rewards in governance tokens.
There are now over $8 billion locked in decentralized finance projects, up from less than $500 million 12 months ago. The transaction fees created by DeFi users have seen Ethereum network’s utilization surpass 96%.
An upgrade to the Ethereum network, Ethereum 2.0, is being developed and is expected to be released later this year. In the meantime, users are advised to use layer-two scaling solutions such as the OMG Network.
Featured image via Pixabay.