Ethereum Gas Fees Drop 95% in One Year, but ETH Price Falls 53% Since Dencun Upgrade
Ethereum, the second-largest cryptocurrency by market cap, has recently experienced a significant transformation following its Dencun upgrade, which was rolled out on March 13, 2024. This upgrade, which integrated the Cancun upgrades on the execution layer and Deneb upgrades on the consensus layer, focused heavily on scalability and reducing transaction costs. With this upgrade came an impressive 95% drop in gas fees over the past year, reshaping the transaction landscape for Ethereum users.
Significant Reduction in Gas Fees
In the wake of the Dencun upgrade, gas fees on the Ethereum network saw a dramatic decline. According to data from YCharts, Ethereum’s average gas fee plummeted from a substantial 72 gwei in 2024 to an astonishing 2.7 gwei by March 12, 2025. This reduction translates into real savings for users: an average swap now costs around $0.39, and NFT transactions average only $0.65. Just a year prior, users were looking at transaction costs of $86 for swaps and $145 for NFT sales. This stark decrease in fees represents a monumental win for both casual and institutional users, as it greatly lowers the barrier to entry for engaging with Ethereum’s decentralized applications (dApps).
Ether Price Decline Post-Upgrade
Despite the positive developments regarding gas fees, the price of Ether (ETH) has taken a sharp turn in the opposite direction. Following the Dencun upgrade, ETH was trading at over $4,070 in March 2024, but by March 13, 2025, that value dropped to around $1,891. This represents a staggering 53% decrease, raising eyebrows across the cryptocurrency community. Industry figures have pointed out the paradox of reduced fees occurring alongside plummeting asset values, which could raise questions about broader market sentiments and the perceived future of Ethereum.
Dominik Harz, co-founder of Build on Bitcoin (BOB), highlighted that this price downturn has erased all previous DeFi total value locked (TVL) gains made during a bullish phase following Trump’s election. As Ethereum grapples with this price decline, it finds itself in a competition for relevance, especially as other blockchains like Solana experience increased user activity, fueled by the rise of meme coins and innovative projects.
Technical Challenges Ahead
While Ethereum’s gas fees have become more attractive, the road ahead is not without its bumps. The next expected update, known as the Pectra upgrade, has already encountered strife. Deployed on the Sepolia testnet on March 5, 2025, the upgrade initially faced several technical hiccups, including the troubling issue of blocks being mined without any transactions attached. Developer Marius van der Wijden confirmed that fixes were implemented, only to see similar errors crop up once again due to unidentified user activity.
Although the Ethereum development team has stabilized the testnet to resume normal transactions, the setbacks have cast shadows over the timely launch of the Pectra upgrade on the mainnet. Harz pointed out that while such technical glitches delay the progress, they are not the core of Ethereum’s overarching challenges.
The Future of Ethereum and Layer-2 Solutions
The Pectra upgrade is designed to boost data availability for layer-2 networks, lower costs, and enhance execution capacities—all vital components that could help Ethereum compete effectively in a crowded market. However, Harz cautioned that Pectra alone may not address the deeper issues plaguing the network. The rising competition from other blockchain platforms has started to erode Ethereum’s dominance as the preferred blockchain for developers, presenting a multi-faceted dilemma for the future of Ethereum.
The drastic reduction in gas fees certainly marks progress and is a primary positive development post-Dencun. However, the concurrent price drop and the technical difficulties surrounding upcoming upgrades create a complex narrative for Ethereum’s long-term sustainability. As the network evolves, questions remain about its ability to not only maintain but strengthen its position as a leader in the ever-evolving blockchain space.
