Ethereum (ETH) Daily Transaction Fees Fall to Lowest Level Since September 2024, Despite Spot ETF Approvals

Daily transaction fees on the Ethereum network have fallen to their lowest level since September 2024, according to data from Token Terminal.

Ethereum network daily transaction fees have hit their lowest since September 2024, a new Token Terminal data analysis shows.

The network generated $731,472 in daily fees on Feb. 8, marking the first time in five months that daily revenue dropped below $1 million. The last time this occurred was in November 2020.

The network experienced a similar slump from Aug. 17 to Sept. 8, 2024, when it also failed to surpass the $1 million threshold in multiple days.

The network’s native cryptocurrency, Ether (ETH), has also disappointed investors over the past year, failing to reach new highs alongside Bitcoin despite the approval of spot exchange-traded funds (ETFs) in major markets like the US and Hong Kong.

Several factors have contributed to the downturn in Ethereum network activity and revenue.

One key factor is the network's rising supply. Since April 2024, Ethereum’s supply has been steadily increasing, reversing the deflationary period introduced by the Merge in September 2022. Ethereum’s total supply has now surpassed pre-Merge levels.

The Merge eliminated Ethereum’s mining-based issuance, which had a high supply inflation rate. Ethereum also implemented the London hard fork in August 2021, which introduced a mechanism that burns a portion of transaction fees. When network activity is high, burned ETH can surpass newly issued ETH, making the asset deflationary.

Another factor is the growth of layer-2 networks, which are designed to reduce congestion and fees on the Ethereum mainchain. While this strategy has been effective in reducing onchain activity, it has also shifted activity away from the main blockchain.

Furthermore, layer-2 networks still face interoperability issues, which has raised concerns about a fragmented Ethereum ecosystem.

Meanwhile, competitors have been gaining ground in specific areas. Tron is emerging as a preferred network for stablecoin transactions, while Solana is rising as a DeFi hub, especially within the memecoin market. Both networks have edged Ethereum in total fees generated over the past three months, Token Terminal data shows.

Beyond onchain factors, internal conflicts within the Ethereum Foundation have also cast uncertainty over the network.

In January, Ethereum co-founder Vitalik Buterin took sole authority of the Ethereum Foundation’s leadership amid criticism of executive director Aya Miyaguchi and conflict-of-interest concerns over researchers’ paid advisory roles at EigenLayer.

However, Ethereum bulls seem unfazed by the concerns. Accumulation addresses scooped up 330,705 ETH ($833 million) on Feb. 7, the largest single-day inflow ever recorded, according to CryptoQuant.