Ethereum fees drop when analysts point to bots as the cause

Source: Adobe / Tobias Arhelger

Ethereum (ETH) average transaction fees are down as much as 50% in two weeks, falling from a 14-day high of $ 22.9 to a low of $ 11.4 on April 11, before rising again . Analysts have attributed the decline to a shift in the types of bots used by traders, with Flashbots replacing PGA (Priority Gas Auction) bots, which tend to raise Ethereum fees by increasing gas prices.

Other potential factors highlighted by commentators are the possibility of users moving from Ethereum to Binance Smart Chain (BSC), as well as an overall decline in usage.

Although Ethereum gas prices have been falling in the past few days, they still remain high by historical standards, even if the rising value of ETH is taken into account. When ETH hit another all-time high against the USD today, gas prices rose again.

Ethereum fees drop when analysts point to bots as the cause 102Source:

Ethereum fees decrease = new trading bots?

In late February, Ethereum’s transaction fees hit an all-time high of $ 38 as demand for non-fungible tokens (NFTs) and the continued popularity of DeFi (decentralized finance) platforms pushed network traffic to new levels.

Fees then declined in early March but rose again, rising to $ 22.9 on March 31.

Since then – and especially in the last seven days – they seem to have been in a kind of mini-freefall. Not only did they hit an average of $ 11.4 on April 11, but Etherscan put the average gas price (in gwei) at 85 on April 11, while hit a low of 65 today before jumping again .

Crypto Twitter (and elsewhere on the internet) said that this drop in gas prices was due to the change in the bots used by traders and miners.

just setting up my twttr

– jack (@jack)

Traders have reportedly started dumping PGA bots and switching to Flashbots. PGA bots, which stand for “Priority Gas Auction”, are used by arbitrage traders to monitor the behavior of their competitors and raise their own gas prices in order to get priority treatment (i.e. to get to the top of the transaction queue ). In other words, they cause fees to rise.

The blockchain analytics platform Nansen data scientist Alex Svanevik shared data suggesting an increase in the use of flashbots, which tends to lower (rather than increase) fees.

just setting up my twttr

– jack (@jack)

Other suspects

Not everyone in the broader crypto community is convinced by this statement. And it’s not surprising that people interested in Ethereum failing have reported other possible causes.

just setting up my twttr

– jack (@jack)

As the above shows, a significant proportion (almost a third) of people suspect that fees are going down because certain users are fed up with Ethereum’s high transaction fees and are switching to Binance Smart Chain as a result. At least that would coincide with reports suggesting that BSC is growing in part due to Ethereum fees.

At the same time, it may be possible that a general decline in usage will dampen charges. As suggested by Ethereum developer Ryan Berckmans, NFT volume appears to have been dropping in the past few days.

4. The activity of Ethereum’s NFT markets appears to have decreased somewhat yesterday, which may have contributed to Ethereum’s reduced fees. Any good time series for NFT metrics? Https://

– Ryan Berckmans (@RyanBerckmans) April 12, 2021

To be fair, all of these factors taken together can lower Ethereum’s transaction fees, which could potentially give ETH a price boost (if it’s cheaper to do ETH). Nevertheless, despite the recent comparative reduction, the fees still remain at a historically high level.

Ethereum fees drop when analysts point to bots as the cause 103Source: Etherscan

As the graphic above shows, Ethereum 2.0 and the proof of commitment to Ethereum cannot be done quickly enough, as even a much-discussed decrease cannot significantly lower the fees.

At 14:15 UTC, ETH is trading at USD 2,226 and is up 4% in one day and 6% in one week. The price is up 15.5% in a month and 1,301% in a year.

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Learn more:

– No optimism for Ethereum in March – L2 scaling solution delayed
– Ethereum fees remain high even with EIP-1559 – says another analyst
– Ethereum is pushing plans for an earlier transition to proof-of-stake
– Ethereum fans boast of high fees as an L2 solution
– Phase 0 of Ethereum 2.0 goes live “successfully”, ETH Drops

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