Ethereum Layer 1 Transactions Reach 2.2 Million Daily as Fees Drop to 17 Cents

Ethereum’s Layer 1 network recently recorded a daily transaction volume of approximately 2.2 million, marking a new high in on-chain activity. Concurrently, average transaction fees have fallen sharply to around 17 cents, a significant reduction from previous congestion-driven spikes. This combination highlights recent protocol upgrades aimed at enhancing network scalability and fee efficiency, raising questions about Ethereum’s capacity to support broader adoption without heavy reliance on Layer 2 solutions.

What happened

Ethereum’s Layer 1 blockchain has reached a milestone with daily transaction counts hitting roughly 2.2 million, according to data reported by Cointelegraph and independently confirmed by Glassnode and Dune Analytics. Alongside this increase in throughput, the average transaction fee has declined to about $0.17, a stark contrast to the substantially higher fees experienced during prior periods of network congestion.

This shift coincides with a series of network upgrades, most notably the London Hard Fork implemented in August 2021, which introduced Ethereum Improvement Proposal 1559 (EIP-1559). EIP-1559 revamped the fee market by introducing a base fee that is burned rather than paid to miners, alongside a mechanism intended to stabilize and often reduce fees. Subsequent protocol optimizations have further contributed to improved transaction efficiency.

Data from third-party analytics platforms reinforce these observations. Glassnode Insights documents a parallel rise in transaction counts and a decline in median fees over recent months. Dune Analytics dashboards show consistent growth in daily transactions without a corresponding increase in average gas prices, suggesting that higher throughput has been achieved without fee inflation.

Industry commentary, including analysis from Cointelegraph and Glassnode, interprets these trends as evidence of Ethereum’s improved scalability on Layer 1. Some analysts argue that this increased throughput at lower fees points to Ethereum’s enhanced ability to support mainstream transaction volumes natively, potentially diminishing the immediate necessity for Layer 2 scaling solutions. However, alternative perspectives, such as those from The Block Research, note that the transaction mix may have shifted toward simpler or batched transactions, which are inherently less costly and more efficient, partially explaining the fee reductions.

Further, Messari Research suggests there might be a nascent trend of transactions migrating back from Layer 2 solutions to Layer 1 due to these improved fee conditions, though this remains an emerging and inconclusive observation.

Why this matters

The recent surge in Ethereum Layer 1 transaction volume combined with lower fees is significant for several reasons. First, it indicates that recent protocol upgrades have had a measurable impact on the network’s capacity and cost structure, potentially enhancing Ethereum’s usability for a wider range of applications and users.

Lower fees and higher throughput on Layer 1 could reduce immediate pressure on Layer 2 scaling solutions, which have been developed to handle Ethereum’s scalability challenges by processing transactions off the main chain. If Layer 1 can accommodate more mainstream usage scenarios directly, this may affect the pace and nature of Layer 2 adoption, as well as the broader ecosystem’s development priorities.

From a market perspective, improved scalability and fee efficiency can attract more users and developers, supporting Ethereum’s role as a foundational infrastructure for decentralized finance (DeFi), non-fungible tokens (NFTs), and other blockchain applications. These improvements may also influence investor and stakeholder perceptions of Ethereum’s long-term viability and competitive positioning relative to alternative smart contract platforms.

Finally, the fee-burning mechanism introduced by EIP-1559 has implications for Ethereum’s tokenomics, potentially affecting supply dynamics over time. While this aspect is beyond the immediate scope of transaction volumes and fees, it remains a relevant structural consideration.

What remains unclear

Despite the confirmed increase in transaction volume and decline in fees, several important questions remain open. The data does not provide a granular breakdown of transaction types, leaving uncertainty about the composition of the increased activity. It is unclear to what extent the rise in transactions is driven by genuine mainstream adoption—such as individual users and diverse applications—or by automated, batched, or simpler transactions executed by bots, DeFi protocols, or NFT minting operations.

Another area of ambiguity concerns the sustainability of these improvements. There is limited long-term data on how Layer 1 will perform during periods of peak demand or major network events post-upgrades. Whether the network can maintain low fees and high throughput consistently remains to be seen.

Additionally, official statements from Ethereum core developers have not explicitly confirmed that Layer 1 alone can fully support mainstream adoption without Layer 2 reliance. Interpretations suggesting reduced Layer 2 necessity are derived from data analysis but lack direct developer endorsement.

The interaction between Layer 1 upgrades and Layer 2 solution adoption is also insufficiently explained. It is not clear how these layers will coexist, compete, or complement each other as the network evolves, nor how user behavior will shift in response to changing fee dynamics.

What to watch next

• The impact of upcoming Ethereum upgrades, including sharding as part of Ethereum 2.0, on Layer 1 scalability and fee dynamics.
• More detailed analytics and reporting on the composition of Layer 1 transactions to better understand the drivers behind volume increases.
• Data on Layer 1 network performance and fee behavior during periods of high demand or market stress to assess resilience and scalability.
• Trends in Layer 2 solution adoption rates and their interaction with Layer 1 fee improvements, including any migration patterns of transactions between layers.
• Official communications from Ethereum core developers and the Ethereum Foundation regarding the long-term scaling roadmap and the envisioned roles of Layer 1 and Layer 2.

While Ethereum’s recent Layer 1 transaction surge and fee reduction demonstrate tangible progress in network scalability, important uncertainties remain about the durability of these gains and their broader implications. The evolving relationship between Layer 1 capacity, Layer 2 solutions, and user behavior will be critical to watch as Ethereum continues its development trajectory.

Source: https://cointelegraph.com/news/ethereum-txs-hit-record-2-2m-while-fees-drop?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.