Ethereum Fees Hit Multi-Year Lows and Revenue Collapses Since Dencun Upgrade

Ethereum Fees Hit Multi-Year Lows

Gas fees on the Ethereum mainnet dropped to 0.067 Gwei on Sunday, reaching one of their lowest levels in years amid muted trading activity following October’s market crash. Data from Etherscan shows that the average cost to execute an onchain swap was just $0.11, while NFT sales averaged $0.19 and cross-chain bridging transactions cost about $0.04. Borrowing onchain cost users around $0.09. Fees had spiked to 15.9 Gwei on Oct. 10, coinciding with the flash crash that erased billions in digital asset value within 24 hours. The sharp reversal in onchain activity quickly pushed gas prices back below 1 Gwei by mid-October, where they have largely stayed through November.

Investor Takeaway

Revenue Collapse Since the Dencun Upgrade

Ethereum’s fee income has been in steady decline since the Dencun upgrade in March 2024, which introduced lower-cost transactions for layer-2 rollups. While the upgrade improved scaling and user experience, it reduced layer-1 activity and cut protocol revenue by an estimated 99% compared with 2021 levels, when network congestion regularly pushed fees above $150. Data from Token Terminal shows Ethereum’s base layer now generates only a fraction of the fees seen during the last bull market. Analysts note that while lower fees help maintain competitiveness against newer blockchains, they have also eroded the base layer’s income that supports validators and long-term security.

Security and Sustainability Concerns

Critics argue that the current fee structure is unsustainable. With validators earning less from transaction fees, the economic incentive to secure the network may weaken, especially if staking yields fall. “The Ethereum network needs a healthy level of fee revenue to ensure validator participation remains robust,” one market researcher said. Lower revenue also signals thinner onchain demand. Because fees fluctuate with network usage, persistently low gas costs suggest that users and developers are shifting activity to layer-2s such as Arbitrum, Optimism, and Base, which now handle most retail and DeFi activity at a fraction of mainnet costs.

Investor Takeaway

Layer-2 Expansion Creates a Double-Edged Effect

Ethereum’s scaling roadmap has leaned heavily on layer-2 networks, which settle transactions back to the base chain. Research from Binance notes that while this structure boosts total throughput and adoption, it also diverts economic activity away from the mainnet. In effect, Ethereum competes with its own ecosystem for fee revenue. Layer-2 usage surged in 2024 and 2025 as new platforms integrated with major DeFi protocols, pushing daily Ethereum transactions above 1.6 million in October even as gas costs dropped to pennies. The trend underscores how scaling success has come at the expense of the main chain’s direct income — a tradeoff developers appear willing to accept for broader adoption. Whether this equilibrium can last is unclear. For now, Ethereum remains the industry’s benchmark settlement layer, but the economics that once made it the most profitable blockchain are being redefined by its own scaling strategy.