Ethereum has long been the backbone of the blockchain world, powering smart contracts, decentralised applications (dApps), and the lion’s share of DeFi and NFT activity. But there’s a catch: its gas fees—those pesky costs to process transactions or execute smart contracts—can be a wallet-draining nightmare. During peak network congestion, a simple token swap on Uniswap might set you back $50, while transferring ETH could cost $30 or more. For small investors or everyday users, that’s a dealbreaker. Meanwhile, new Layer 1 competitors like Monad, alongside established players like Solana and Avalanche, are luring users with near-zero fees and lightning-fast transactions. So, how can Ethereum tackle its gas fee problem, and can it stay ahead of the competition? Let’s dive into the details.
Why Are Ethereum Gas Fees So High?
Ethereum’s gas fees are the price of doing business on its network. Every transaction—whether it’s sending ETH, minting an NFT, or interacting with a DeFi protocol—requires computational power, which validators provide in exchange for fees paid in ETH. These fees are measured in gwei (1 gwei = 10^-9 ETH), and they spike when the network gets busy. Think back to the 2017 CryptoKitties craze, when NFT minting frenzy pushed fees to $50 for basic transactions, or more recent DeFi booms where a single swap could cost $100. Even after Ethereum’s 2022 transition to proof-of-stake (The Merge), which slashed energy use by 99.95%, gas fees remain high during peak times, averaging $2–$5 but often soaring to $30 or more. The root cause? Limited block space and the computational demands of the Ethereum Virtual Machine (EVM), which powers dApps. When demand outstrips capacity, fees skyrocket, pricing out smaller users and pushing them toward cheaper alternatives.
Ethereum’s Plan to Slash Gas Fees
Ethereum isn’t sitting idle—it’s been rolling out a multi-pronged strategy to tackle gas fees, blending off-chain scaling, protocol upgrades, and user-level optimizations. Here’s how it’s fighting back:
1. Layer 2 Solutions: Offloading the Burden
The most immediate fix comes from Layer 2 (L2) solutions, which process transactions off Ethereum’s main chain (Layer 1) and batch them for settlement on the mainnet. This slashes congestion and cuts fees by up to 90%. Key L2 approaches include:
- Optimistic Rollups: Platforms like Arbitrum and Optimism assume transactions are valid unless challenged, boosting throughput to 40,000 transactions per second (TPS). A swap on Arbitrum might cost just $0.10–$0.50, compared to $50 on the mainnet.
- Zero-Knowledge Rollups: zkSync and StarkEx compute transactions off-chain and submit cryptographic proofs to Ethereum, offering fees as low as $0.02. zkSync Era alone has processed over 200 million transactions, with fees often under $0.05.
- Sidechains: Polygon runs parallel to Ethereum, offering fees around $0.01–$0.10. With over 1 billion transactions processed, it’s a go-to for cost-conscious users.
The 2024 Dencun upgrade (EIP-4844) supercharged L2s by introducing “blobs” for data storage. Previously, L2s used CALLDATA, which accounted for 60% of their transaction costs. Blobs, which are pruned after 18 days, reduce mainnet bloat, cutting L2 fees by up to 90%. Users can bridge assets to L2s via wallets like MetaMask, interact with dApps at a fraction of the cost, and bridge back when needed—though bridging still carries risks like smart contract vulnerabilities.
2. Protocol Upgrades: Scaling the Core
Ethereum is also upgrading its core protocol to boost scalability and lower fees:
- EIP-1559 (2021): This introduced a base fee plus tip model, making fees more predictable. The base fee, which adjusts with demand, is burned—reducing ETH supply—while users can add a tip for faster processing. Over 3 million ETH (worth $7 billion at $2,300 per ETH) has been burned since EIP-1559, but fees during congestion remain high.
- Danksharding and Proto-Danksharding (EIP-4844): These upgrades, rolled out in 2024, optimize data availability for L2s. Danksharding aims to make L2 fees negligible, potentially $0.001 or less, by streamlining how data is stored and accessed.
- Sharding: Slated for 2025–2026, sharding will split Ethereum into 64 shard chains, each processing transactions in parallel. This could boost capacity to 100,000 TPS, potentially dropping fees to under $0.01 by distributing the load across shards. However, sharding’s complexity means delays are possible.
3. User and Developer Optimizations
While Ethereum scales, users and developers can take steps to save on fees:
- Timing Transactions: Fees drop during off-peak hours, like late nights in North America (9:00 p.m. to 11:00 p.m. PT), often to $1–$2. Tools like Etherscan’s gas tracker help identify these windows.
- Batching and Optimization: Batching multiple transactions into one, using gas tokens, or optimizing smart contracts to use less computational power can cut costs by 10–50%. For example, DeFi protocols like Balancer offer gas refunds, further reducing expenses.
- Alternative Ecosystems: Platforms like Proton Chain wrap ETH into tokens like XETH, enabling fee-free transactions within their network, though this isn’t a direct Ethereum solution.
Facing the Competition: Can Ethereum Keep Up?
Ethereum’s high fees have opened the door for Layer 1 competitors, which promise faster transactions and lower costs. Let’s see how Ethereum stacks up against new players like Monad and established chains like Solana and Avalanche.
Monad: The New Challenger
Monad, a new EVM-compatible Layer 1 blockchain, is turning heads with its promise of 10,000 TPS, 1-second block times, and fees under $0.01. Unlike Ethereum’s sequential transaction processing, Monad uses parallel execution and superscalar pipelining, allowing it to handle multiple transactions simultaneously. Its EVM compatibility means Ethereum developers can port dApps with minimal changes, making it a direct threat. Monad’s proof-of-stake system and low hardware requirements also support decentralization, with its testnet in early 2025 earning praise on X for its speed. However, Monad’s mainnet is still pending, and its real-world performance remains untested.
Solana: The Speed King
Solana is a heavyweight competitor, boasting 65,000 TPS and fees averaging $0.00025 per transaction. Its proof-of-history (PoH) consensus and parallel processing make it a favorite for gaming and high-frequency trading, with over 1,500 dApps and $5 billion in DeFi value locked. But Solana has flaws—its 1,500 validators pale in comparison to Ethereum’s 500,000, raising centralization concerns, and past outages, like a 17-hour downtime in 2022, have dented its reliability.
Avalanche: The Modular Contender
Avalanche offers 4,500 TPS with fees around $0.10, using its Avalanche consensus and modular subnets for specific use cases. Its C-Chain is EVM-compatible, hosting over 300 dApps and $1 billion in DeFi value. Avalanche’s flexibility makes it attractive for enterprise solutions, but its smaller ecosystem and less battle-tested security lag behind Ethereum’s.
Other Players in the Race
- Binance Smart Chain (BSC): BSC delivers fees around $0.05 and 100 TPS, with $3 billion in DeFi value. Its proof-of-staked-authority (PoSA) model, controlled by 21 validators, makes it centralized, limiting its appeal for decentralization purists.
- Cardano: With fees around $0.03 and 250 TPS, Cardano focuses on sustainability via its Ouroboros proof-of-stake model. Its $300 million DeFi value is growing, but its ecosystem remains smaller than Ethereum’s.
- Polkadot: Polkadot’s parachains enable 1,000 TPS with fees around $0.02, and its $1 billion DeFi value highlights its cross-chain focus. It’s a strong contender for interoperability but lacks Ethereum’s dApp depth.
Ethereum’s Competitive Edge
Despite the competition, Ethereum has unique strengths:
- Ecosystem Dominance: Ethereum hosts over 4,000 dApps, $60 billion in DeFi value locked, and 70% of NFT volume. L2s like Arbitrum and Optimism have processed over 500 million transactions, with Arbitrum alone holding $10 billion in total value locked (TVL).
- Security and Decentralization: With 500,000 validators, Ethereum is the most decentralized smart contract platform, offering unmatched security for high-value applications. Solana’s 1,500 validators and BSC’s 21 can’t compete on trust.
- Developer Community: Ethereum’s 200,000+ active developers dwarf Solana’s 20,000, ensuring a steady stream of innovation. Its EVM standard is the gold standard for smart contracts, even adopted by competitors like Avalanche and Monad.
The Challenges Ahead
Ethereum’s gas fee solutions aren’t perfect. Even with L2s, mainnet fees during congestion can hit $50, and bridging assets between L1 and L2s (or to other chains via tools like Anyswap) introduces complexity and risks—bridge hacks have cost over $2 billion since 2020. L2s also fragment liquidity, as users must choose between networks like Arbitrum or zkSync, complicating the user experience. Competitors like Monad, with 10,000 TPS and sub-$0.01 fees, could siphon developers if they deliver on mainnet, while Solana’s $0.00025 fees and Avalanche’s $0.10 fees already attract cost-sensitive users.
Can Ethereum Stay on Top?
Ethereum can reduce gas fees through L2 solutions, sharding, and protocol upgrades, with L2s already cutting costs to $0.02–$0.50 and danksharding aiming for under $0.001 in the future. Its ecosystem, security, and developer base give it a strong foundation to compete, but the race is tight. Monad’s EVM-compatible 10,000 TPS is a wake-up call—Ethereum’s sharding must deliver to match that throughput. Solana and Avalanche offer speed and cost advantages, but their centralization trade-offs keep Ethereum relevant for projects prioritizing security. If Ethereum can make L2s more seamless and fully implement sharding, it can stay ahead. For now, it’s a battle between Ethereum’s scalability roadmap and the rise of high-performance Layer 1s like Monad. The future of blockchain innovation hangs in the balance—Ethereum’s got the tools, but it needs to use them wisely.
