A surge in Ethereum Layer 2 solutions have offloaded some transactions.

Ethereum’s ETH blockchain, pivotal for numerous projects including DeFi and NFTs, experienced a significant 70% drop in gas fees, reaching a four-year low by February 20th.

Daily fees fell from $23 million to $7.5 million.

According to data from IntoTheBlock, average gas prices have decreased to approximately 5 gwei, equating to around $0.80 per transaction, a sharp decline from the $20-plus fees during peak activity in 2024.

This astonishing drop has led analysts and users to explore its causes, mainly attributed to the rise of Ethereum L2s taking on transactions and a fall in mainnet activity.

Rise of Ethereum L2 solutions

The emergence of L2 solutions such as Arbitrum ARB, Optimism OP, and Base are key contributors to the reduced fee levels.

These L2 networks now handle over 1.5 million daily transactions combined, an increase from 800,000 a year ago.

Following the Dencun upgrade which introduced ‘blobs’ to lessen L2 data expenses, gas fees on these networks have dropped by as much as 90%, with some costing just cents.

For Rollups, data is posted yet still decreases mainnet activity. Validiums and Optimiums, akin to Rollups, periodically post validated transaction state commitments to Ethereum without publishing data on the mainnet.

Declining network activity

At the same time, Ethereum’s mainnet faced a slowdown, with daily transactions declining from 1.2 million in January 2024 to just over 900,000 in February 2025.

This decrease corresponded with DEX volumes falling to $2.62 billion daily, down from a peak of $5 billion in 2024.

The diminishing excitement around memecoins and speculative NFT drops has further weakened the demand for block space.

Since the Dencun upgrade, ETH issuance has exceeded burns by 197,000 ETH, or $500 million, indicating a lower fee pressure.

Lower transaction costs may encourage adoption, yet L2 fragmentation could risk liquidity dilution.

As L2s like Base, with an $8 billion TVL, flourish, Ethereum’s mainnet may evolve into a security backbone rather than a transaction hub.