Ethereum transaction fees hit all-time lows as activity surges

Ethereum’s Layer 1 network processed more transactions than ever while charging users almost nothing for the privilege.

Daily transactions on Ethereum L1 peaked at 1.87 million on December 31, 2025, blowing past the previous record of 1.61 million set during the frenzy of May 2021. Meanwhile, average transaction fees have cratered to around $0.21 in recent readings, with some periods dipping as low as $0.15. That’s a decline of more than 50% year-over-year, and it represents an all-time low for cost-per-transaction on the network.

How Ethereum broke the fee-activity correlation

The key inflection point was the Dencun upgrade, which went live in March 2024. It introduced something called proto-danksharding through EIP-4844, which created a much cheaper way for Layer 2 rollups to post their data back to Ethereum’s main chain. Before Dencun, L2s had to compete with regular users for the same limited blockspace. After Dencun, they got their own dedicated, discounted lane.

The result was a cascading relief effect. Layer 2 networks like Arbitrum, Optimism, and Base could process transactions far more cheaply, which pulled a massive volume of activity off L1. The main chain, freed from congestion, could handle its remaining traffic at a fraction of the old cost.

Quarterly transaction volume tells the broader story. Q1 2026 logged a record 200.4 million transactions on Ethereum L1. Active addresses hit all-time highs alongside transaction volumes as far back as October 2025.

The burn problem nobody wants to talk about

Since the Merge in September 2022, Ethereum has burned a portion of every transaction fee, removing ETH from circulation permanently. When fees were high, the burn rate exceeded new ETH issuance, making the asset deflationary.

That math doesn’t work when fees are this low. Daily ETH burned from transaction fees hit an all-time low of roughly 53 ETH on some days in 2025, a rounding error compared to the thousands of ETH that were being torched daily during peak periods in 2022 and 2023. Despite record activity, the network simply isn’t generating enough fee revenue to maintain the deflationary pressure that investors had come to expect.

What this means for investors

The cheap-fees-plus-high-activity combination is a double-edged sword for ETH as an investment. On one side, lower barriers to entry are clearly driving adoption. More users, more transactions, and more active addresses all point to a healthier, more accessible network.

On the other side, the economic value of that activity is increasingly being captured somewhere other than Ethereum L1. When users transact on Layer 2 rollups, the fees they pay go primarily to those L2 networks. Ethereum L1 collects a small settlement fee, but it’s a fraction of what it used to earn when all activity happened directly on mainnet.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.