Ethereum fees hit new lows as upgrades shifts activity to Layer-2

Ethereum’s base-layer transaction fees have fallen to their lowest levels of the year, even as capital locked across the ecosystem remains relatively stable.Latest Glassnode and DeFiLlama data indicate a persistent decline in fee revenue, suggesting a structural shift in user interaction with the network rather than a collapse in usage.The 90-day moving average of total transaction fees has dropped steadily since early 2025. Historically, lower fees reflected weaker demand for blockspace, but this cycle looks different: Ethereum’s total value locked [TVL] and ecosystem capital have held firm, suggesting users are still active but executing transactions elsewhere.Ethereum Fusaka and scaling upgrades reduce pressure on mainnetData from Glassnode shows that the Ethereum fee has continued to drop after its sharp drop between January and May 2025, when it dropped from over 1,800 to around 389 ETH. As of this writing, the fee was around 289 ETH.The decline has continued after Ethereum’s Fusaka upgrade, which expanded data capacity and improved throughput.Source: GlassnodeThese changes make it easier for rollups and Layer-2 networks to settle activity more efficiently, reducing the need for expensive mainnet transactions.Earlier technical changes, including EIP-1559 and post-Merge improvements, also pushed Ethereum toward a model where everyday activity happens on L2s while the base layer serves as a secure settlement environment.L2 migration reshapes Ethereum’s revenue profileChain revenue and application revenue have also trended lower over the same period. This reinforces the idea that value is spreading across multiple execution layers rather than disappearing from Ethereum altogether.In other words, the network is processing activity through cheaper layers, not losing users. As of this writing, chain and app revenue were $8.5 million and $6.6 million, respectively.Source: DeFiLlamaStable TVL supports this view, with the TVL currently over $70.5 billion. Despite fluctuations in the ETH price, liquidity in smart contracts has remained resilient, indicating continued demand for DeFi services and staking, even as fees decline.Price corrects as fundamentals adjustETH has corrected from its recent highs, but the decline in fees appears to be linked more to structural changes than to reduced interest. At the time of writing, it was trading at around $3,127.If Layer-2 adoption continues and additional upgrades expand capacity, Ethereum’s base-layer fee revenue may settle into a lower range without necessarily signaling weakening network fundamentals.Final ThoughtsFalling Ethereum transaction fees reflect a shift toward Layer-2 usage following recent upgrades.Stable TVL and ecosystem liquidity indicate that network activity remains healthy, even as base-layer revenue declines.