Transaction fees on the Ethereum network have fallen to their lowest level since 2020, reflecting a significant slowdown in user activity and contract interactions across the blockchain.
According to data from on-chain analytics firm Santiment, average fees have dropped to just $0.168 per transaction - levels not seen in over five years.
The decline in fees is directly tied to reduced demand for blockspace, as fewer users are transacting with Ether or deploying smart contracts. Brian Quinlivan, marketing director at Santiment, explained in an April 17 report that Ethereum’s fee mechanism operates on a simple supply-demand model: when user activity surges, fees rise as participants bid for faster confirmations. In contrast, current low activity means users face minimal competition, and therefore, pay less.
This drop in transaction costs comes amid a broader market pullback following the Trump administration’s announcement of sweeping global tariffs on April 2. Despite a 90-day exemption window for most countries, both traditional and crypto markets saw sharp declines. Ethereum has lost over 12.5% in value over the past two weeks and remains stagnant near the $1,600 level.
Santiment noted that retail interest in Ethereum has waned alongside the fee drop and price stagnation, with sentiment highly reactive to macroeconomic developments. However, Quinlivan emphasized that Ethereum's fundamentals remain intact and that periods of low retail engagement often precede price recoveries—particularly for assets with ongoing development momentum.
While activity on the Ethereum base layer has cooled, the network’s roadmap continues to advance. The next major protocol upgrade, Pectra, is scheduled for mainnet activation on May 7, after earlier delays linked to testnet disruptions and configuration issues.
Pectra’s first phase will introduce several key improvements:
- Blob capacity for rollups will double from 3 to 6, easing congestion on Layer 2s.
- Transaction fees are expected to decline further, as rollups gain more bandwidth.
- Stablecoin payments for gas fees will be enabled, allowing users to pay in USDC or DAI.
- Staking limits will increase, raising the cap from 32 ETH to 2,048 ETH to support institutional validators.
The second phase of the upgrade, slated for late 2025 or early 2026, will focus on long-term scalability. It will implement a new data structure that improves storage efficiency and introduces statelessness features, enabling nodes to validate transactions without needing to retain the full dataset.
Pectra builds upon March 2024’s Dencun upgrade, which introduced proto-danksharding and significantly reduced transaction costs on Layer-2 networks. These upgrades are part of Ethereum’s broader transition toward a modular architecture where base-layer activity is minimized in favor of cheaper, more scalable rollup environments.
As Ethereum moves toward this future, lower base-layer activity - and consequently, lower fees - may become more common during non-peak periods, reflecting the network’s evolving usage patterns rather than weakness.
While low fees currently reflect subdued on-chain demand, Ethereum’s upgrade cycle and Layer-2 scaling strategy continue to push the platform toward greater efficiency and broader adoption. The market may be in a consolidation phase, but infrastructure developments signal that the network is preparing for the next wave of growth.