New Hope for Ethereum Gas Fees: Analyzing Four Possible Reasons Behind the Drop in Transaction Costs

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In 2021, as Ethereum’s price surged, so did its notorious gas fees. What was once a minor annoyance became a major barrier—users routinely faced gas prices of 100 Gwei, with peak moments exceeding 1,000 Gwei. However, since late April, a surprising reversal has taken place. Even as ETH hits new all-time highs, gas fees have dropped significantly and remained consistently low.

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From over 100 Gwei to frequently under 50 Gwei—and even reports of transfers confirmed at just 24 Gwei—the shift is both dramatic and puzzling. What’s behind this sudden relief? In this article, we’ll explore four key factors that may explain the decline in Ethereum gas fees:

Let’s break down each factor with data-driven insights and real-world implications.

Increased Block Size: More Space, Less Congestion?

One of the most immediate technical changes was the increase in Ethereum’s gas limit following the Berlin hard fork. The gas limit determines how many transactions can fit into a single block. In response to community feedback and miner coordination, the average block size was raised by approximately 20%, from 12.5 million to 15 million gas.

Larger blocks mean more transaction capacity—reducing network congestion and, theoretically, lowering gas prices.

And indeed, the effect was noticeable: gas fees dropped shortly after the adjustment.

But history offers a cautionary tale. In June 2020, a similar gas limit increase led to only temporary relief. Within days, increased demand filled the extra space, and fees climbed again—just before the DeFi boom took off.

This time, however, two weeks after the adjustment, fees remain low despite strong network usage. Uniswap V3 launched during this period, introducing capital-efficient liquidity pools that could have driven even higher gas demand. Yet average fees hovered around 66 Gwei—still far below previous peaks.

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Analysis:

While increased block size played a role, it doesn’t fully explain the sustained drop. If capacity alone dictated fees, we’d expect congestion to return quickly. Something else is suppressing demand—or changing how transactions compete for space.

Flashbots: Disrupting the Gas Auction Game

Another compelling factor is the growing adoption of Flashbots, a solution designed to mitigate the negative impacts of MEV (Miner Extractable Value) and eliminate priority gas auctions (PGA).

Traditionally, bots compete to get their transactions included first by bidding increasingly high gas fees—a practice known as “gas bidding wars.” These PGA bots inflate network costs for everyone.

Flashbots changes this by allowing miners to receive profitable bundles of transactions off-chain, without revealing them publicly. This removes the incentive for bots to overpay in gas just to win priority.

Since early April, Flashbots has gained support from over 60% of Ethereum’s mining hashrate. As adoption rose, observable activity from three major PGA bots (0x00e54, 0x00A2a, 0x00e43) showed a clear decline in transaction volume—suggesting they’re either less active or less effective.

Moreover, miners now earn more through Flashbots “tips” than through traditional high-fee bidding. Data shows these off-chain payments now regularly account for over 5% of total miner revenue—replacing wasteful gas wars with efficient value extraction.

Another clue? The standard deviation of daily gas fees has decreased. Lower volatility indicates fewer extreme bids—further evidence that PGA-driven spikes are fading.

Analysis:

While comprehensive data on all MEV bots is limited, available metrics strongly suggest Flashbots is reducing inefficient gas competition. It’s not just about fairness—it’s about making the network more predictable and affordable.

User Migration to Alternative Chains

With the rise of Layer 2 solutions and competing smart contract platforms like Polygon, Fantom, and Avalanche, many speculated that Ethereum’s mainnet activity had declined.

Cross-chain bridge data supports this: billions of dollars have flowed out of Ethereum into these ecosystems. Polygon leads the trend, followed by Fantom and Avalanche. Meanwhile, inflows back to Ethereum remain minimal—indicating a net outflow.

Even Binance Smart Chain (BSC), which relies less on bridges, saw explosive growth in active addresses—from 50,000 in early 2021 to over 1 million at its peak.

However, context matters. A $100 million outflow may sound significant, but it pales in comparison to Ethereum’s daily settlement volume of over $30 billion. Furthermore, Ethereum’s own active address count has grown—from around 450,000 to nearly 700,000—approaching levels last seen during the 2018 bull run.

Interestingly, BSC’s user base has slightly declined since Ethereum’s gas fees dropped—suggesting some users may be returning when conditions improve.

Analysis:

Yes, some activity has shifted—but not enough to single-handedly explain the fee drop. The exodus is real but relatively small compared to Ethereum’s overall scale.

Market Activity: Did Demand Really Fall?

At first glance, one might assume lower fees mean lower demand. But the data tells a different story.

Ethereum’s active address count peaked around the time of the gas limit increase and remains near historic highs. Block utilization is high—often above 90%—indicating strong demand for block space.

So why aren’t fees spiking?

The answer may lie in behavioral shifts. Anecdotal evidence suggests users are more cautious about when and how they transact on-chain. With ETH prices rising, even modest Gwei costs translate into meaningful fiat expenses—prompting users to wait for optimal moments or use Layer 2 alternatives.

Still, there’s no hard evidence of declining overall activity driving the fee drop.

Frequently Asked Questions

Why are Ethereum gas fees dropping while ETH price is rising?

Gas fees are measured in Gwei (a fraction of ETH), not USD. Even if ETH price increases, network-level factors like block size, MEV tools like Flashbots, and user behavior can reduce competition for block space—keeping gas prices low.

Can Flashbots really reduce gas fees?

Yes. By moving profitable transaction bundles off-chain, Flashbots eliminates wasteful priority gas auctions (PGAs). Miners earn more efficiently, and regular users face less competition—resulting in lower and more stable fees.

Are people leaving Ethereum for other chains?

Some migration is happening—especially to Polygon and Layer 2 solutions. But Ethereum’s active usage remains strong. The shift complements rather than replaces Ethereum’s ecosystem.

Will low gas fees last?

Not permanently—but improvements like EIP-1559, Layer 2 scaling, and continued Flashbots adoption will help stabilize fees over time.

What is PGA in crypto?

PGA stands for Priority Gas Auction, where bots compete to get transactions mined first by bidding higher gas fees. This often drives up costs for all users. Solutions like Flashbots aim to reduce PGA inefficiencies.

How does block size affect gas fees?

A higher gas limit allows more transactions per block, reducing congestion. While not a long-term fix, it can provide immediate relief during periods of high demand.

The Road Ahead: Sustainable Fees Through Innovation

The recent drop in Ethereum gas fees isn’t due to one single cause—but a combination of technical upgrades, behavioral shifts, and ecosystem evolution.

Key core keywords shaping this trend include:

Together, these forces are making Ethereum more efficient. With EIP-1559 on the horizon—introducing fee burning and base fee adjustments—and Layer 2 solutions gaining traction, long-term relief is within reach.

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