In a welcome relief for Ethereum users, the average gas fees on the network have significantly dropped in the first week of June compared to the peak levels witnessed in May. This decline can be attributed to the waning memecoin frenzy and a reduction in maximal extractable value (MEV) bot activities. In this article, we will explore the factors behind the decrease in gas fees and how it has affected the Ethereum network.
The Decline in Gas Fees:
After hitting a multimonth high of $20 in May, the average gas fee has now dropped to $7.34, representing a nearly one-third decrease. This decline is also evident when considering gwei, a denomination of Ether. The daily median gas price has decreased from an almost 140 gwei peak to 24 gwei, as reported by Dune Analytics.
Memecoin Frenzy and Gas Fees:
The memecoin frenzy, which gained momentum in late April and reached its peak in May, played a significant role in driving up gas fees. Numerous new memecoins, including Aped (APED) and Bobo Coin (BOBO), flooded the markets during this period. The dominance of memecoins in network activity caused an unprecedented shift in the top 10 gas-burning altcoins. Instead of traditional cryptocurrencies like ETH, Wrapped Ether (WETH), or Tether, memecoins like Troll (TROLL), APED, and BOBO became the top spenders.
Moreover, the surging popularity of memecoins on decentralized platforms, coupled with the slower listing process on mainstream centralized exchanges, contributed to the rise in Ethereum gas fees.
Bitcoin Ordinals and Gas Fees:
While May witnessed the memecoin frenzy on Ethereum, Bitcoin also experienced a surge in popularity with the introduction of Bitcoin Ordinals. Ordinals enable the decentralized storage of digital art on the Bitcoin blockchain. Consequently, the Bitcoin network saw the emergence of numerous new memecoins, with Pepecoin (PEPE) even achieving a billion-dollar market capitalization.
By the end of May, the number of Ordinal inscriptions on the Bitcoin blockchain had surpassed 10 million, reflecting the growing interest in this new form of digital art storage. Total fees paid for Ordinal inscriptions increased by a staggering 700% in May, reaching 1,639 Bitcoin.
The Cooling Effect:
As the memecoin frenzy has started to subside, Ethereum gas fees have cooled down accordingly. This decrease in gas fees brings much-needed respite to users who were facing high transaction costs. Additionally, the decreased activity surrounding Ordinals inscriptions has contributed to the overall reduction in gas fees on the Ethereum network.
The Ethereum network has experienced a significant drop in gas fees as the memecoin frenzy wanes and the popularity of Ordinals inscriptions decreases. This decline offers relief to users who were burdened by high transaction costs in the previous month. As the network continues to evolve, it remains crucial for users and developers to monitor the dynamics of gas fees and explore solutions to ensure cost-effective and efficient transactions on the Ethereum blockchain.