Written by Harith Kamarul
The surge in ETH prices during 2021 brought an unwelcome side effect for Ethereum users: skyrocketing gas fees. At times, transactions required over 1000 Gwei, with 100 Gwei becoming the norm. However, since late April, gas fees have unexpectedly dropped to consistently lower levels—even as Ethereum hit new price highs.
This article explores four key factors that may explain this trend:
- Increased block size to mitigate congestion
- Flashbots adoption reducing profitable gas auctions
- User migration to alternative blockchains
- Declining market activity (though data contradicts this)
1. Larger Blocks Easing Congestion
The Berlin hard fork implemented gas adjustments, and Ethereum’s community signaled openness to increasing block sizes. Miners subsequently raised the gas limit by 20% (from 12.5M to 15M per block). Larger blocks accommodate more transactions, directly reducing network congestion.
Impact: Immediate gas fee reductions. However, past adjustments (like June 2020’s) saw fees rebound within days. This time, fees remained stable for weeks—even during Uniswap V3’s launch.
Analysis: Block size expansion helps, but isn’t the sole factor.
2. Flashbots Disrupting Gas Auctions
Flashbots, designed to counter front-running bots, gained majority miner support starting April 4. Their rise correlates with:
- Reduced Priority Gas Auction (PGA) activity: Tracked bot transactions declined as Flashbots usage grew.
- Alternate miner revenue: Flashbots’ "tips" now account for ~5% of miner income, replacing some gas fee competition.
- Lower gas fee volatility: Smaller standard deviations suggest fewer aggressive PGA bids.
Analysis: Incomplete but compelling data points to Flashbots’ role in stabilizing fees.
3. Users Migrating to Other Chains
Layer 2 solutions and rival chains (e.g., Polygon, Fantom, Avalanche) have drawn funds from Ethereum:
- Net outflows: Cross-chain bridges show Ethereum losing ~$100M daily—though this is minor compared to Ethereum’s $30B+ daily settlement volume.
- BSC’s growth: Binance Smart Chain’s active addresses surged from 50K to 1M in early 2021, but Ethereum’s own addresses grew steadily (450K to 700K). Notably, BSC activity dipped as Ethereum’s fees fell.
Analysis: Outflows exist but remain marginal relative to Ethereum’s scale.
4. Market Activity Decline? (Unsupported)
Active addresses peaked post-block-size increase and stabilized near historical highs. Blocks remain fuller than early 2021, contradicting claims of reduced activity.
Analysis: Data doesn’t support this hypothesis. Anecdotal user caution may exist but lacks empirical backing.
Key Takeaways
- Multi-factor relief: Block expansion, Flashbots, and minor user migration collectively eased fees.
- Future optimism: EIP-1559, Layer 2 scaling, and Ethereum 2.0 promise further gas stability and affordability.
👉 Explore Ethereum’s latest upgrades
FAQs
Q: Will gas fees stay low?
A: Current trends suggest stability, but demand spikes (e.g., NFT drops) could temporarily raise fees.
Q: Is Ethereum losing users to other chains?
A: Some migration occurs, but Ethereum’s user base continues growing overall.
Q: How does Flashbots benefit ordinary users?
A: By reducing MEV exploitation, it creates fairer transaction pricing.
Q: When will Layer 2 solutions fully reduce fees?
A: Optimistic rollups and ZK-rollups are already live, with broader adoption expected in 2025.
Q: Does EIP-1559 eliminate high fees?
A: No—it improves predictability by burning base fees, but demand still dictates costs.