Due to low prices, Ethereum gas fees have dropped to single digits in recent days, but experts warn that these levels are unlikely to last.

According to Etherscan, on August 10, users paid 1 Gwei, or $0.007, to send ETH, a figure not seen since 2020. Costs quickly rose again, with fees doubling to 2 Gwei the next day and rising to as high as 6 Gwei today. And since Ethereum went through the Berlin hard fork in May 2021, there have only been fewer than 20 days where average daily gas fees fell below 10 Gwei.

“This often occurs during times when Ethereum is suffering from below-market price levels and is generally viewed as a reflection of lower network activity and market sentiment,” said Alice Liu, head of research at CoinMarketCap.

Ethereum is currently trading for around $2,700, still around 45 percent below its all-time high of $4,850, which has led investors to question what is holding back the asset’s value, especially in light of the SEC’s recent approval of a spot ETH ETF.

Liu told The Defiant that as with most things in the cryptocurrency space, “gas fees can fluctuate but are typically highest during U.S. business hours, and lower fees tend to occur on weekends or late at night when demand typically drops.”

She had a warning for users: “Such extremely low gas fees will not last long.”

Matt Cutler, CEO of Blocknative, agrees.

“Ethereum L1 gas fees have been very volatile in the past,” Cutler told The Defiant, “so we shouldn’t assume that 1 Gwei fees are here to stay.”

Layer 2 activity

Analysts say Ethereum’s low gas fees are due to a shift in activity to Layer 2 scaling networks.

There has definitely been a trend towards Layer 2 usage, with L2Beat reporting a significant increase in activity since the Dencun upgrade in March 2024. Total value locked (TVL) on L2 increased 300% from $12 billion in the same period last year to $36 billion. In early June, TVL was approaching a high of $50 billion.

Select L2 networks have absorbed the majority of user activity, with Coinbase’s Layer 2 Base becoming extremely popular, rising to number 2 by TVL barely a year after launch. It is behind Arbitrum with $14 billion in TVL and 40% market share. Other major protocols in use include Blast, Optimism, and Mantle.

Price impact

However, some believe that price is more important than the popularity of L2s.

Ethereum L1 transaction volume, which tends to increase during times of low gas prices, is actually more correlated with the price of ETH, which is likely why we see the low single-digit transaction costs.

“With lower Ether-USD prices, we see lower transaction volumes and therefore lower gas prices,” Cutler said.

Increasing network offering

Low gas fees raise an additional concern for ETH holders: an inflationary network.

Lower gas prices mean less ETH is burned, which ultimately leads to an increasing token supply. According to ultrasonic.money, only 273 ETH were burned today – yesterday it was 120 – while 2,560 were issued.

If users follow Liu and Cutler’s advice, this inflationary environment should not last. What’s more, it hasn’t been the case in the past, as volatile gas prices also led to volatility in ETH supply. Both of these can easily subside when transaction volumes start to increase.

However, it all seems to depend on the price, and that has struggled to rise given the potential catalyst many were expecting from the ETH ETF.