While many will assume that the Ethereum Gas decline is a consequence of the price crash, we can see the gas fees started to move in a downtrend many weeks before the crash.
Declining network congestion reason for low Ethereum gas prices.
The classic market principle of supply and demand also applies to the Ethereum Gas price. ETH is currently struggling with little demand, which strongly affects price development. At the end of April, the gas limit was raised from 12.5 million to 15 million GWEI per block.
This allows more transactions to be processed in each block, causing the statistical demand value to drop. But falling demand is not the only reason for the current record low.
The Ethereum Gas pricing mechanics work on pay more, pay the first basis. The more GWEI you are willing to give away, the more incentive you give the miners to process your transaction faster. So-called arbitrage bots voluntarily pay more gas to push their decentralized exchange transactions through as quickly as possible. However, these transactions are now moved to a parallel chain on the Ethereum blockchain. This circumstance is also leading to falling gas prices.
However, Ethereum gas prices are unlikely to remain at such a low level permanently. Experts assume that gas prices will rise again with the “London” update on August 4th.
At a glance: What is Ethereum Gas?
Gas is a “fuel” on the Ethereum blockchain, just like in real life. All transactions, or rather the fees incurred in the process, are paid for with gas. Users are free to decide whether they want to pay more to have their transactions validated faster voluntarily.