Ethereum users have seen a huge drop in gas fees over the past year after the Dencun upgrade, one of the biggest updates to the network.
The upgrade was designed to improve Ethereum’s scalability and reduce transaction costs. However, despite lower fees, the price of $ETH has dropped significantly over the same period.
On 13 March 2024, Ethereum introduced the Dencun upgrade, which combined two important updates: the Cancun upgrade on the execution layer and the Deneb upgrade on the consensus layer.
In total, the update introduced nine Ethereum Improvement Proposals (EIPs) that aimed to make the network faster and more cost-efficient.
One of the main goals of the upgrade was to reduce gas fees for transactions on Ethereum’s layer-2 networks.
According to data from YCharts, the average gas fee has dropped from 72 gwei in 2024 to just 2.7 gwei as of 12 March 2025. This marks a 95% decrease, making Ethereum transactions much cheaper than before.
A year ago, making a swap on Ethereum cost users around $86 in fees, while selling a non-fungible token (NFT) required about $145 in gas fees.
However, according to the latest data from Etherscan, an average swap now costs just $0.39, and an NFT sale costs around $0.65. This dramatic reduction in fees has been a major relief for users who previously struggled with high costs.
Despite this positive change, Ethereum’s native cryptocurrency, $ETH, has not performed well in the market over the past year.
Price drops by 53% despite lower fees
While Ethereum has succeeded in lowering transaction costs, the price of $ETH has taken a significant hit. When the Dencun upgrade was launched in March 2024, $ETH was trading at over $4,070.
However, one year later, on 13 March 2025, its price had fallen to around $1,891, according to data from CoinGecko. This represents a 53% decline.
The drop in price comes amid tough competition from other blockchain networks. Solana, in particular, has gained attention due to its low-cost transactions and high speed. Meanwhile, Ethereum has faced challenges that have led to uncertainty among investors and developers.
The co-founder of the hybrid layer-2 solution Build on Bitcoin (BOB), Dominik Harz, shared his thoughts on Ethereum’s struggles-
“Monday’s price drop erased all DeFi TVL gains since Trump’s election. Between Solana’s memecoin frenzy and Ethereum’s fractured few months, it’s clear the industry is searching for a new, more sustainable and secure frontier for DeFi.”
The cryptocurrency market is constantly evolving, and Ethereum is working on its next major upgrade, known as Pectra. However, early testing of this upgrade has already run into some problems.
Pectra upgrade faces issues before launch
On 5 March 2025, Ethereum’s Pectra upgrade was deployed on its final testnet, Sepolia. This upgrade is a combination of two previously planned updates—Prague and Electra—and aims to improve network efficiency, staking, and overall scalability.
However, the upgrade has faced several technical issues. Shortly after the testnet launch, developers encountered error messages and noticed that some blocks were empty.
While a fix was quickly deployed, an unknown user later triggered the same issue again, causing further disruptions. Developers have since managed to stabilise the testnet and ensure that transactions are being processed correctly.
Despite these challenges, Harz believes that Ethereum’s issues go beyond just these testnet problems. He said-
“While that’s a step in the right direction, the reality is that Ethereum is quickly losing its position as the go-to chain for builders, and Pectra isn’t the fix-all solution to its deeper issues.”
The Pectra upgrade is expected to bring several major changes, including improvements in transaction processing, staking, and network infrastructure.
One of the key updates in the Pectra upgrade is Account Abstraction (EIP-7702). This feature allows users to pay gas fees with assets other than $ETH, such as stablecoins like $USDC.
Previously, Ethereum users could only use $ETH to cover transaction fees. This new feature is expected to make Ethereum more user-friendly, especially for those who do not hold $ETH.
Another important change is the Staking Enhancements (EIP-7251), which increases the maximum amount of Ethereum that can be staked by a validator from 32 ETH to 2,048 $ETH.
This makes it easier for large holders to manage their stakes. However, not everyone is happy about this change. Some members of the Ethereum community worry that it could lead to a more centralised network, where only wealthy participants benefit. A popular user on X, named Yogi, shared their concerns-
“Larger holders benefit from simplified staking management and optimised margins, but will negatively impact decentralisation. Let’s see how this impacts validator count in the coming weeks.”
In addition to staking improvements, the upgrade also focuses on making Ethereum more scalable. The introduction of Ethereum Improvement Proposals (EIPs) 7691 and 7623 aims to optimise data management and reduce transaction fees.
These changes are expected to make Ethereum more efficient and increase adoption of layer-2 scaling solutions.
Ethereum developers are also working on infrastructure upgrades, such as EIP-2537, which will make smart contract deployment more efficient, and EIP-7549, which will improve Ethereum’s consensus mechanism. These changes should help Ethereum process transactions faster while using fewer resources.
The upgrade will also introduce PeerDAS and Verkle Trees, which will help Ethereum scale more effectively in the long term. These improvements will allow the network to store and retrieve data more efficiently, which is critical as Ethereum continues to grow.
One major addition to the staking system is an automatic reinvestment option for validators. Instead of manually restaking their rewards, validators will now be able to automatically reinvest them, which could help increase their long-term earnings. While many validators see this as a welcome change, there are still some issues that need to be resolved.
Ethereum developer, Tim Beiko, highlighted one ongoing problem with the upgrade, related to a custom deposit contract on Sepolia.
This issue has caused problems with transaction inclusion, making it difficult for some Ethereum clients to process transactions properly. Beiko addressed the issue, saying-
“We’re investigating an issue caused by the custom deposit contract on Sepolia. This has caused some EL clients to have issues including transactions in blocks.”
Ethereum’s developers are actively working to fix these technical issues before the upgrade is fully deployed on the mainnet.
The past year has been a mixed one for Ethereum. The Dencun upgrade successfully lowered gas fees by 95%, making transactions more affordable for users.
However, the price of $ETH has fallen sharply, and competition from other blockchains, such as Solana, is putting pressure on Ethereum’s dominance.
As Ethereum moves forward with the Pectra upgrade, developers are working to resolve technical problems and ensure that the network continues to improve.
While new features like Account Abstraction and staking enhancements could bring positive changes, concerns remain about decentralisation and network stability.
