The Ethereum (ETH) blockchain continues to reach new milestones with continuing efforts to migrate the network to the proof-of-stake (PoS) protocol.
The network achieved its lowest average transaction costs of $3 in August 2022, the lowest amount since December 2020, according to August 4 information released by Kaiko with Finbold.
Transaction costs reached over $200 in May 2022, coinciding with the Bored Ape Yacht Club property sale.
The decrease in transaction costs is a relief for the Ethereum network since the community has previously expressed worry about the expensive charge. Decentralized finance (DeFi) and non-fungible tokens are likely to use the network as a result of the cheap transaction costs (NFT)
Intriguingly, the researchers observed that the decline in transaction costs coincides with a decrease in trading activity on decentralised exchanges, but the number of transactions has increased.
According to the study, transaction costs have decreased even under adverse market conditions, which has benefitted decentralised finance.
“In downturn markets, trading volumes on controlled exchanges collapse as public interest wanes. During a down market, however, DeFi still has many use cases, and we can observe that one element of on-chain activity is Ethereum transaction costs, as opposed to broad interest,” Kaiko noted.
Ethereum is getting ready for the Merge upgrade
The current milestone precedes the September Merge update, in which the network will abandon the energy-intensive Proof-of-Work (PoW) process.
Notably, the Ethereum network wagers that the Merge will reduce token supply and raise prices. If ETH’s price increases as network demand spikes after the proof-of-stake Beacon Chain takes control of the network’s economic activities, Ethereum gas costs may increase rapidly.