Briefing
Ethereum’s median gas price has collapsed to a multi-year low, a direct result of the Dencun upgrade successfully shifting activity to Layer 2 solutions. This massive reduction in cost confirms the network’s priority on utility and accessibility, but it carries a significant economic trade-off. The low demand for mainnet block space means the EIP-1559 fee-burning mechanism is now burning less Ether than the network is issuing to validators. This shift has flipped the supply dynamic, resulting in a net inflationary period, with over 44,500 ETH added to the supply in the last 30 days.
Context
What is the true cost of scaling Ethereum? The average person is wondering if the network can maintain its “ultrasound money” narrative while simultaneously achieving low transaction costs for mass adoption. This data helps to answer whether the Dencun upgrade, which dramatically lowered Layer 2 fees, has permanently altered the core economic model of the Ethereum base layer.
Analysis
The key metric is the Median Gas Price, measured in Gwei, which represents the cost of executing a transaction. When network demand is high, this price spikes, and a larger portion of the transaction fee → the “base fee” → is permanently burned, leading to a deflationary supply. The Dencun upgrade introduced “blobs” to lower the cost for Layer 2 rollups, successfully diverting traffic away from the mainnet. This reduced competition for block space has driven the median gas price down to just 1.9 Gwei, a five-year low.
Because the base fee is so low, the amount of Ether burned is now less than the amount issued to validators for securing the network. The pattern shows that scaling success has created a temporary, but clear, inflationary supply trend. This indicates the network is currently optimized for utility and low cost, a trade-off that is structurally sound for growth but challenges the short-term supply scarcity thesis.
Parameters
- Median Gas Price → 1.9 Gwei → The lowest transaction cost seen on the network since mid-2019.
- 30-Day Supply Change → +44,500 ETH → The net amount of Ether added to the total circulating supply over the last month.
- Lowest Average Fee → $1.34 → The average transaction fee, a multi-year low.
Outlook
This low-cost environment is a powerful catalyst for application growth and user adoption on Layer 2 networks. The near-term future for Ethereum is one of maximum utility and accessibility. The inflationary supply is a temporary consequence of low mainnet demand, which will persist until a new wave of high-value activity or a major Layer 2 event drives up the base fee again. A reader should watch for a sustained spike in the median gas price back above 10 Gwei, as this would signal a return to deflationary supply and a renewed scarcity narrative.
