As we traverse deeper into the sprawling landscape of blockchain, Ethereum emerges as a beacon of promising advancements. Interestingly, transaction costs on Ethereum’s blockchain have recently plunged to their lowest since last December. Interestingly, this comes amid bustling activity on Friend.tech, a platform built on Coinbase’s L2 chain, hinting at the increasing popularity of scaling solutions.
Ethereum, the world-renowned programmable blockchain and home platform to the ether (ETH), the world’s second-largest cryptocurrency, is currently at its most affordable in 8 months. Indeed, the total daily fees linked to Ethereum transactions dipped to 1,719 ETH ($2.8 million) this Sunday.
Ethereum employs a proof-of-stake consensus mechanism, which involves validators instead of miners to establish and affirm transaction blocks. Validators, or entities which aid in securing the network, receive transaction fees but not in totality. They receive the priority fee or the tip users add to entice validators to prioritize their transactions.
However, a decline in total fees indicates low network usage, since fees correlate with network activity levels, primarily, the magnitude of pending transactions. Hence, the recent trough in fees points towards the increasing prevalence of Ethereum layer 2 scaling solutions.
In fact, since Friend.tech was introduced on August 10, Ethereum L1 charges have dropped 25% lower than the cumulative yearly average until then, contrasting significantly with times when events like the NFT application CryptoKitties’ triumph or Yuga Labs NFT drops would cause temporary congestion in the Ethereum network.
This implies that successful applications gaining substantial traction without congesting the blockchain network is a favorable development for Ethereum, as evident from the growth of Ethereum’s L2 scalability solutions.
Furthermore, Friend.tech, which operates on top of Base, Coinbase’s L2 chain, that employs the Optimism stack, spiked in popularity amassing more than $25M revenue within the first two weeks of its debut on Aug. 1. The contribution of Layer 2 solutions such as Optimism, Arbitrum, and Base is pivotal in scaling Ethereum, alleviating congestion and managing transaction costs on the primary network.
The success of this approach is emphasized by recent data indicating that the number of daily transactions on Optimism Mainnet reached nearly 900K on August 15. Further, the number of transactions processed between Ethereum mainnet and major layer 2s using the optimistic rollup technology recently achieved their second-highest value.
It appears that as competition among L2s intensifies, Ethereum stands to profit. The receding transaction costs on Ethereum’s blockchain signal a positive evolution, largely attributed to the burgeoning acceptance of L2 scaling solutions, marking a major milestone in blockchain technology’s evolution.
Source: Coindesk
