Ethereum fees have started to trend back down again. For most of a month-long period, Ethereum fees had skyrocketed. This was mainly attributed to the popularity of NFT minting. It put regular transactions in direct competition with NFTs for block space, which drastically raised the price of sending a transaction on the network given that NFTs required higher fees to mint, and thus for regular transactions to be able to compete, their fees had to be raised.
Gas fees for Ethereum still remain on the high side, but compared to their peak in the past one month, the current fees are a reduction. During the weekend, gas fees fell to as low as 30-40 gwei, presumably from the decreased volume that was experienced this past weekend. But these fees remain on the high side for Ethereum, which usually charged lower fees for transactions. Leading to the need for better alternatives when sending ETH in order to reduce the fas fees paid per transaction.
Layer 2 Solutions Help To Drive Down Ethereum Fees
Ethereum fees on the network are currently averaging around \$5 per transaction. While this may not seem like a lot when sending big transactions, smaller transactions are seeing high fees to send a small amount of ETH. This has led to the rise in popularity of Layer 2 solutions that offer lower fees for ETH transactions.
There currently are a couple of Layer 2 solutions that are up and running and offering lower fees on transactions on the Ethereum network. Compared to transactions carried out directly on Ethereum, these solutions offer a better alternative for send fees. A Layer 2 solution known as Loopsring currently offers \$0.25 on ETH transfers. Polygon Hermez also offers the same range.
Moving up into the high side is ZKSynch, which offers $0.27 for ETH transfers. Protocols like Arbitrum One and Optimism run into the higher side of this, with each offering $1.64 and \$.06 respectively on Ethereum transactions. Higher than previously mentioned protocols. But still lower than carrying out ETH transactions direction on Ethereum.
Better Options For Token Swaps
A big disparity presents when Ethereum is compared to the Layer 2 protocol offerings. These Layer 2 protocols offer fees up to 80% of what a user would pay using Ethereum. Currently, to perform a token swap using Ethereum, the fee sits at $25.0. In contrast to this, Layer 2 solution Loopspring gives a $0.85 fee for token swaps. With Arbitrum One costing $2.84 and Optimism costing $3.56.
Users are now experiencing a pressing need to move their tokens onto Layer 2 solutions, which would guarantee that would pay lesser fees on transactions. The current fees for transactions have now gone up as of Monday. Moving up from its 30-40 gwei low from the weekend, recommended fees now sit 89 gwei to send a slow transaction, 96 gwei for standard transaction fees, and 115 gwei for fast transaction speeds, according to ETH Gas Station.