What Happened to Ethereum Gas Fees? Too Low, Yet Too High!

Ethereum gas fees have always been a hot topic among developers in the crypto industry. Historically, the gas has been seen as too high, making the network expensive for everyday users. But in the past few weeks, something surprising happened as gas fees dropped significantly, thanks to rollups.

However these fees suddenly spiked again during the market crash on August 4-5, leaving many to wonder – are Ethereum gas fees still too high or are they finally becoming affordable?

To really understand what’s happening with Ethereum’s gas fees, we need to grasp how the network actually operates. Think of Ethereum as more than just a digital network; it's a provider of something very valuable called "secure block space." Just like land or oil, secure block space is limited and precious. When demand for it rises, so do the prices. This is mainly why Ethereum gas fees can skyrocket during times of heavy use and increased network activity. 

Why Gas Fee Spikes Aren’t Always a Problem

When the gas fees spiked during the August 4-5 market crash, it wasn’t a sign of the system failing – it was actually proof that the system was DOING ITS JOB. The network was prioritizing those who needed to make urgent transactions, just like how airlines might raise ticket prices during peak travel seasons. Large players, like financial firms or rollups (Layer 2 solutions that bundle many transactions together), were willing to pay higher fees to ensure their transactions went through quickly.

Think of it like this: when gas prices rise, gas stations and airlines – who buy fuel in bulk – don’t immediately pass those costs onto consumers. They absorb some of the cost, protecting their customers from sudden price hikes. In the case of Ethereum, rollups and large traders can absorb these short-term spikes because they make enough profit during normal times to cushion the blow when fees go up.

The Future of Gas Fees: More Competition, Lower Costs

One surprising thing during the August 4-5 crash was that even rollup fees went up. This wasn’t supposed to happen according to the theory, but it highlights that the market for rollup fees is still young. As the competition among Layer 2 (L2) solutions heats up, these platforms will likely start competing on more than just price—they’ll compete on fee stability too. 

Some roll ups might even advertise that they offer the most stable, predictable fees, appealing to users who want to avoid sudden spikes. In time, these Layer 2 solutions will likely develop strategies to save profits during low-fee periods and use them to absorb the impact of high-fee times. This way, users can enjoy lower and more stable fees, even when demand is high.

Is Zero Gas Fees Now A Thing?

We’re already seeing a trend where gas fees are being hidden from regular users, especially on Layer 2 networks. For example, transactions using USD Coin (USDC) on the Base network already benefit from this. Projects that launch their own L2 solutions can treat gas costs as a loss leader – something they’re willing to take a small hit on to attract more users.

This is similar to how some businesses offer free shipping to customers, even though it costs them something. UniswapX, for instance, absorbs part of the gas fees, making transactions cheaper for users. Over time, we can expect more decentralized apps (dApps) and even wallet providers to follow this trend, making the user experience smoother and more affordable.

Conclusion

Ethereum gas fees may seem unpredictable, swinging between being too low and too high, but this is all part of the network’s design. The one-day spikes wasn’t a sign of failure; it was Ethereum working as intended, prioritizing critical transactions during a time of high demand.

As the Ethereum ecosystem continues to evolve, we’ll likely see further improvements that make gas fees less of a burden for everyday users. With increased competition among Layer 2 solutions and more advanced fee management strategies, the dream of affordable and predictable transaction fees on Ethereum is becoming a reality.