Basically, Ethereum gas fees go down as decentralized exchanges (DEX) and decentralized finance (DeFi) decline.
Specifically, Ethereum’s fees have fallen back from their recent highs. Along with a decline in DeFi transaction volumes.
What is gas in Ethereum?
If we know slightly the world of Ethereum. It is very likely that the word “gas” has reached our ears.
To better understand, gas in Ethereum is a unit of measurement used to measure the work done by Ethereum, to carry out transactions or any interaction within the network.
Consequently, the increase in gas rates has been one of the most notable results of the increasing interaction with DeFi protocols. And currently, the Ethereum (ETH) network is home to most of the major DeFi projects.
In fact, Ethereum gas rates have risen steadily since November 2020. And they peaked on February 23, when the average cost of a transaction reached 373 Gwei.
Etherscan data shows that since February 23, rates have decreased by 65% with the average cost falling to 131 Gwei on March 3. And the data shows that certain hours of the day offer rates below 70 Gwei.
DeFi transactions down
As stated, DeFi transactions decreased as the market rallied. One possible source of the decline in Ethereum gas fees can be found by looking at the daily volume of decentralized exchanges (DEX).
Indeed, data from Dune Analytics shows that trading volume in DEXs has declined since it peaked at $ 4.35 billion on February 23. And the DEX daily growth metric was down 50% on March 3.
In this regard, according to Connor Higgins of Flipside Crypto, the fees have decreased in recent days. In particular, that the high rates observed on February 23 were an outlier compared to the total average, over a longer period of time.
«On average, rates fell but appear to be normalizing after a day of unusually high rates».
Indeed, gas rates were higher than the average between February 22 and 23. When network congestion increased due to a market-wide sell-off.
By the way, after the market stabilized, gas rates returned to their normal average.
Finally, our publications are informative. Therefore, in no case should they be followed as investment advice.
I say goodbye with this phrase from Benjamin Graham: «Successful investments consist of knowing how to manage risk, not avoiding it».