Ethereum gas price, unlike the real-life one, is seeing a steep decline.
Crypto analytics firm Messari has noted an average transaction fee of $10, down from $62 in November.
? The decline, measured in dollar terms, coincided with lower ETH prices, of course. However, measured in ETH, gas fees have decreased as well, pointing at a lower demand for Ethereum transactions in general.
? This may be largely due to the colling down of the NFT craze that started last August. After the first successes of BAYC, generative NFTs and Axies, a huge number of NFT projects inundated the market, some of which came out as scams, and others just weren’t good enough (yet?).
As NFT space matures and explores new use cases, such waves of interest are all but natural.
? Another possible explanation for the decrease in Ethereum demand are its competitors, proposing lower fees and higher throughput.
Blockchains like Solana position themselves as alternative NFT platforms, while Terra is steadily gaining ground as a high place for DeFi, or decentralized finance: DefiLlama analytics website shows that 55% of the Total Value Locked in DeFi is on Ethereum (down from approximately 83% one year ago), while Terra is responsible for over 11% (up from almost 0% a year ago).
Ethereum’s update (the merge of the PoW and PoS chains) is expected this year. Maybe just in time to save the leadership position among smart contract platforms ?