by Farzad Vajihi, Analyst of stock market and cryptocurrency, Ph.D. in economics.
The release of the long-awaited Ethereum Merge upgrade has so far been a tremendous success. The second most popular cryptocurrency in the world was updated seamlessly and without any problems. However, after the launch of Ethereum Merge, blockchain enthusiasts still have many questions: will ETH fees get lower now? If Merge was such a massive update to the Ethereum network, then why are my ETH gas fees still the same? In this article, you will find all the answers about Ethereum Merge gas fees that you’re looking for!
Why Was Ethereum Merge Needed?
There’s absolutely no denying that high gas fees used to be one of the main problems of Ethereum. Especially in 2021, during the height of the NFT craze, ETH gas fees became so high that many crypto enthusiasts felt completely discouraged and moved from Ethereum to alternative blockchains like Cardano or Solana. However, despite all that, the main point of the Merge upgrade was not the lowering of ETH gas fees.
The Merge upgrade was a massive endeavor that required years of planning, and it was so complicated that it was postponed six times. But when it finally arrived, the roll-out was smooth.The ETH blockchain updated automatically when the Total Terminal Difficulty (TTD) achieved a specific number, and the switch from PoW (Proof-of-Work) to PoS (Proof-of-Stake) took place immediately. So why are some crypto investors disappointed about not seeing an instant change in ETH gas fees?
The thing is, the Merge was never intended to lower fees. It was primarily designed to lower Ethereum’s energy consumption. In this regard, Merge was a total success – the Ethereum blockchain now consumes over 95% less energy because specialized hardware is no longer needed to confirm transactions on the ETH blockchain. In other words, Ethereum is now a fully environmentally friendly blockchain. That’s very important since among the ongoing energy crisis and climate change, many countries in the world are working on regulations targeted at Proof-of-Work cryptocurrencies.
Another advantage of the Merge are the changes to Ethereum supply. After the release of the Merge, more newly issued ETH coins are being burnt, which means that Ethereum is more deflationary. This can greatly influence the ETH price in the long term.
Although the Merge increased Ethereum’s efficiency, it was not aimed at decreasing the fees and transaction times. For example, before the Merge ETH blocks were created each 13-14 seconds, and after the Merge this number was lowered to 12 second, so the change was minimal.
Ethereum Gas Fees Are Already Lower
The main reason why we haven’t really seen a huge decrease in ETH gas fees after the release of Merge is very simple: Ethereum fees have already fallen down significantly months before Merge was released.
Ethereum gas fees were extremely high throughout 2021, which was caused by the massive popularity of NFTs. Everyone was minting and trading NFTs, which turned out to be a huge burden on the Ethereum network. After that, ETH gas fees spiked briefly in May 2022, but since then the fees have been gradually lowering.
At the time, the average Ethereum transaction fee is around $3.70. It’s much lower than in 2021, when ETH gas fees were around $40-50 on average, and sometimes surpassed $100 during the times of peak activity. According to estimates, the average ETH fee is currently 93% lower than at its height in May 2022.
In other words, crypto enthusiasts who hoped for a huge decrease in ETH gas fees after the launch of Merge probably didn’t notice that the fees have already been declining for months. Sure, ETH fees might still be much higher than the fees of Solana or Cardano, but Ethereum has made huge progress and the fees keep getting lower and lower.
ETH Gas Fees Will Get Much Lower In the Next Upgrade
If the current ETH gas fees are still too high for you, don’t worry. The next Ethereum upgrade called “Surge” is intended specifically to greatly increase Ethereum’s scalability to massively decrease the gas fees.
Surge will hugely lower Ethereum gas fees by introducing sharding: the Ethereum network will be split into smaller fragments, which will make transactions much faster and cheaper. Unfortunately, we’ll have to wait for a while before that happens. The release of Surge is planned for 2023, but it’s worth remembering that Ethereum has a habit of postponing updates many times, so there’s no guarantee that the Surge will actually get released next year.
