Ethereum network transaction volumes have begun to soar, bringing with them a rise in their relative gas prices. Data from on-chain analytics firm Glassnode indicates that the fees have more than tripled in size since the end of 2022.
Over the past nine months, Ethereum transactions have cost an average of 10-20 gwei. However, due to large transactional volumes, this figure has now grown to 38 gwei. According to Glassnode, “the incremental nature of the gas demand suggests an early resurgence of network activity may be underway.”
Ethereum gas fees normally rise and fall depending on network demand. Therefore, as more users attempt to add a transaction on the next block, the fees/cost will rise.
NFT Trading Activity Has Helped Grow Ethereum Gas Fees
Unlike previous spikes in Ethereum gas fees, the new figures are not the result of new wallets joining the Ethereum ecosystem. Data shows that the number of new addresses generated on the network is still 40% below what it was a year ago. Therefore, indicating that existing traders are the driving force behind the recent surge in transaction volumes.
Specifically, a new drive from Blur with its various incentives to attract users, as well as Yuga Labs’ launch of a highly engaging and rewarding Dookey Dash game have spurred on collectors. In addition, prominent collections announcing the launch of new projects such as Doodles 2 have played a key role.
Glassnode notes, “The recent attention surrounding Blur has led to a surge in demand for block space, resulting in increased fees for validators, and more ETH being burnt via EIP1559.”
Blur’s rise to the top is proving controversial, as Julian Holguin, CEO of Doodle, highlights. The competition between the two leading NFT marketplaces has constricted the cash available to many NFT projects that have relied on secondary royalties for revenue.
That said, NFT transactions on Ethereum have risen by 97% for the past two consecutive months. They are approaching levels last seen during the NFT boom from mid-2021 to mid-2022.
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Basil is an avid fan of blockchain technology and all its innovations, and he is passionate about sharing this narrative with his audience. He has spent over five years in the crypto space, specializing in research and creating Web3 content for various media outlets around the globe.