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Bitcoin and Ethereum Enjoy Low Transaction Fees Amid Network Optimizations and Scaling Solutions

Jul 3, 2024

Bitcoin and Ethereum Enjoy Low Transaction Fees Amid Network Optimizations and Scaling Solutions
Bitcoin and Ethereum Enjoy Low Transaction Fees Amid Network Optimizations and Scaling Solutions
Bitcoin and Ethereum Enjoy Low Transaction Fees Amid Network Optimizations and Scaling Solutions

Bitcoin and Ethereum users are currently benefiting from significantly reduced transaction fees due to decreased network congestion and the adoption of layer-2 scaling solutions. As of late June, the average Bitcoin transaction fee dropped to an eight-month low of $1.93, while Ethereum fees averaged $0.70, down from highs of $2.50 in March. The decline in Bitcoin fees is attributed to a post-halving adjustment in mining activities, reducing competition for block space. Meanwhile, Ethereum's fees have plummeted following the London hard fork and the implementation of EIP-1559, which introduced a fee-burning mechanism and optimised fee calculations. This combination has facilitated a shift of complex operations to layer-2 platforms like Arbitrum and Optimism, enhancing Ethereum's scalability and reducing fees on its main chain. While lower fees are generally positive for users, they pose challenges for miners reliant on transaction fees for revenue, particularly in the face of ongoing protocol upgrades and shifts in network usage dynamics.