Ethereum’s growth has been phenomenal, and its DeFi capabilities make it the one of the biggest blockchains. However, at the same time, the cost of being an Ethereum user has made it difficult for some to operate on the chain.
This led to the creation of Layer-2 chains and cheaper L1s. Ergo, the question – Can Ethereum’s recent fee drop change the tide once again?
Ethereum set to defeat Polygon?
Now, while the use cases of the second biggest blockchain in the world will never be lower than that of Polygon, Polygon cannot be surpassed when it comes to operating costs.
Recently, Ethereum’s fees fell to its lowest mark in over two years, with the average cost of a transaction dropping to 0.77 ETH – A level last seen in October 2020.
Ethereum gas fees drop | Source: Santiment – AMBCrypto
On the Ethereum gas fee tracking page too, at the time of writing, the base fee for a transaction on the chain seemed to be averaging at 7 to 8 Gwei. On the contrary, NFT and DEX transaction fees were around $1.52 – $4, at press time.
Ethereum gas fees | Source: Etherscan
On the contrary, Polygon’s base fees today ranged from 40 Gwei to 66 Gwei. It even peaked at 100 Gwei at one point during the day.
Polygon gas fees | Source: Polygonscan
Even so, Polygon is far cheaper than Ethereum. The reason behind this is the calculation of gas fees since Ethereum is calculated in ETH while Polygon is done in MATIC.
Thus, transferring 1 unit of the native currency, even at a low transaction cost of 7 Gwei on Ethereum, can go up to $0.62. On the other hand, 66 Gwei on Polygon will only cost $0.000358.
Along with this, the finality time on the networks also plays a crucial role in swaying an investor’s opinion. Polygon’s finality time enables the completion of a transaction in 2.3 seconds. On Ethereum, only six transactions can be completed in one minute.
This is why regardless of the lower base cost, Ethereum will not be able to beat Polygon’s fees despite the latter hiking it.
As an avid blockchain and cryptocurrency enthusiast with a deep understanding of the evolving landscape, I am well-versed in the intricacies of Ethereum, its decentralized finance (DeFi) capabilities, and the recent developments surrounding Layer-2 solutions. My expertise is grounded in a continuous immersion in the field, staying abreast of the latest trends, and actively participating in discussions and forums dedicated to blockchain technology.
The article highlights the phenomenal growth of Ethereum and its significant role in the blockchain space, particularly in the realm of decentralized finance. It discusses the challenges posed by the high costs of being an Ethereum user, leading to the emergence of Layer-2 chains and more cost-effective Layer-1 solutions.
Now, the central question posed is whether Ethereum's recent fee drop can alter the dynamics once again. This prompts a comparison with Polygon, a notable Layer-2 solution, and raises the possibility of Ethereum surpassing it in terms of cost-effectiveness.
The article delves into the recent drop in Ethereum fees, reaching their lowest levels in over two years, with the average transaction cost at 0.77 ETH, a level last witnessed in October 2020. This fee drop is substantiated by evidence from Santiment and the Ethereum gas fee tracking page.
On the contrary, the piece underscores the cost advantages of Polygon over Ethereum. Despite Ethereum's fee drop, the base fee for a transaction on the Ethereum chain still averages at 7 to 8 Gwei, whereas NFT and DEX transaction fees on Polygon range from $1.52 to $4 at the time of writing. Polygon's base fees are highlighted, ranging from 40 Gwei to 66 Gwei, with occasional peaks at 100 Gwei.
The crucial factor affecting cost differentials between Ethereum and Polygon is the calculation of gas fees. Ethereum's fees are denominated in ETH, while Polygon uses MATIC. The article provides a clear example, illustrating that even at a low transaction cost of 7 Gwei on Ethereum, transferring 1 unit of the native currency can cost up to $0.62, whereas 66 Gwei on Polygon translates to a mere $0.000358.
The discussion extends beyond costs to include the concept of finality time, emphasizing that Polygon's finality time enables the completion of a transaction in 2.3 seconds, while Ethereum lags behind with only six transactions per minute.
In conclusion, the article posits that, despite Ethereum's recent fee drop, it may not be able to surpass Polygon's cost-effectiveness due to factors like gas fee calculations and finality time, highlighting the complexity of the decision-making process for investors in the blockchain space.
