The Ethereum network has undergone one of the most impactful upgrades in its history, and the results are now clear. One year after the Dencun upgrade went live, Ethereum’s average gas fee has plummeted by 95%, making transactions dramatically cheaper for users across the ecosystem. However, despite this major technical success, the price of Ether (ETH) has taken a sharp downturn—down 53% since March 2024.
This divergence between network performance and market sentiment raises important questions: Is Ethereum still a strong investment? What do lower fees mean for developers and everyday users? And how does this compare to competing blockchains?
Let’s dive into the details behind Ethereum’s transformation and what it could mean for the future.
The Dencun Upgrade: A Game-Changer for Scalability
On March 13, 2024, Ethereum launched the Dencun upgrade, a pivotal milestone combining two major protocol improvements:
- Cancun – targeting the execution layer
- Deneb – enhancing the consensus layer
Together, these introduced nine Ethereum Improvement Proposals (EIPs), with EIP-4844 (Proto-Danksharding) being the most significant. This proposal laid the groundwork for future full danksharding by introducing "blobs" — temporary data storage units that reduce the load on Layer 1.
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The primary goal? Drastically reduce transaction costs for Layer-2 rollups such as Arbitrum, Optimism, and zkSync. These networks bundle transactions and post them to Ethereum, but previously paid high fees to store data on-chain. With EIP-4844, they now use cheaper blob space, passing savings directly to users.
How Much Have Gas Fees Really Dropped?
Before Dencun, Ethereum’s average gas price hovered around 72 gwei in early 2024—a level that made small transactions impractical during peak times.
As of March 12, 2025, that figure has collapsed to just 2.7 gwei, according to data from YCharts. That’s a 95% reduction in base fees.
What does this mean in real-world costs?
| Transaction Type (Pre-Dencun) | Average Cost | Transaction Type (Post-Dencun) | Average Cost |
|---|---|---|---|
| Token Swap | ~$86 | Token Swap | ~$0.39 |
| NFT Sale | ~$145 | NFT Sale | ~$0.65 |
(Source: Etherscan)
These numbers represent a seismic shift. What once cost enough to buy a meal now costs less than a cup of coffee—making microtransactions, DeFi interactions, and NFT trading accessible to a far broader audience.
Why Did ETH Price Fall 53% Despite Network Success?
Here’s where things get complex.
While the network is performing better than ever, Ether’s price has dropped from $4,070 in March 2024 to approximately $1,891—a decline of over half—according to CoinGecko.
Several factors may explain this disconnect:
1. Market-Wide Crypto Correction
The broader cryptocurrency market entered a bear phase in late 2024 and early 2025. Bitcoin halved in April 2024, often followed by price dips 6–12 months later. This cyclical trend likely impacted ETH alongside other assets.
2. Shift in Investor Sentiment Toward Alternatives
Solana has seen explosive growth in activity, particularly around memecoins and retail trading. Its fast, low-cost infrastructure attracted traders looking for quick gains—something Ethereum previously dominated during the 2021 NFT boom.
3. DeFi TVL Gains Erased
Dominik Harz, co-founder of Build on Bitcoin (BOB), pointed out that Ethereum’s recent price drop erased all Total Value Locked (TVL) gains made in DeFi since the U.S. presidential election. When asset prices fall, dollar-denominated TVL metrics shrink—even if user activity remains stable.
4. Staking Overhang and Sell Pressure
With more than 30% of ETH supply staked, some investors may be withdrawing rewards or exiting positions amid uncertainty, adding downward pressure on price.
Ethereum’s Next Upgrade: Pectra Faces Early Hurdles
Looking ahead, Ethereum’s next major upgrade—Pectra—is set for April 2025. It aims to improve staking mechanics, increase validator efficiency, and introduce account abstraction features.
However, early testing hasn’t gone smoothly.
On March 5, 2025, the Pectra upgrade was deployed on the Sepolia testnet, but developers immediately encountered issues:
- Blocks were mined with zero transactions
- Repeated error messages disrupted consensus
- An unknown actor retriggered a patched bug, causing further instability
Despite setbacks, core developer Marius van der Wijden confirmed that the team rolled out fixes and eventually stabilized the network. Transactions are now processing normally on testnet.
These hiccups highlight the complexity of evolving a live blockchain but don’t necessarily signal long-term failure. Most major upgrades face turbulence during testing.
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Frequently Asked Questions (FAQ)
Q: Does lower gas mean Ethereum is more scalable now?
A: Yes. The Dencun upgrade significantly boosts scalability by reducing data load on Layer 1 through blob transactions. This enables Layer-2 networks to operate more efficiently and cheaply, effectively expanding Ethereum’s capacity without compromising security.
Q: Will gas fees stay this low forever?
A: Not necessarily. Fees are currently low due to reduced network congestion and EIP-4844 efficiency. However, if demand surges—especially from NFT mints or DeFi protocols—fees could rise again, though still likely remaining far below pre-Dencun levels.
Q: Is ETH a good investment after the price drop?
A: That depends on your outlook. Fundamentally, Ethereum is stronger technically with lower fees and improved Layer-2 integration. However, macroeconomic conditions, competition from chains like Solana, and investor sentiment play big roles. Always do your own research before investing.
Q: How does Pectra differ from Dencun?
A: While Dencun focused on scalability and cost reduction via data blobs, Pectra targets staking improvements and usability enhancements like account abstraction, which simplifies wallet experiences and enables smart contract wallets by default.
Q: Are Layer-2 networks benefiting the most from Dencun?
A: Absolutely. Networks like Arbitrum, Optimism, and zkSync saw their transaction costs drop by over 90%. This makes them far more competitive with high-speed blockchains while retaining Ethereum’s security guarantees.
Final Thoughts: Performance vs. Perception
Ethereum’s story over the past year is one of technical triumph overshadowed by market pessimism.
The blockchain is now faster, cheaper, and more scalable than ever before—achieving long-standing goals around Layer-2 support and user accessibility. Yet, its native token has lost more than half its value.
This gap between fundamentals and price may present an opportunity—or a warning sign—depending on your perspective.
One thing is certain: Ethereum remains at the forefront of innovation in decentralized systems. With Pectra on the horizon and continued momentum in developer activity, the network is far from stagnant.
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Whether you're a developer building dApps, an investor assessing long-term value, or just a curious observer, Ethereum’s evolution offers powerful lessons about the complex relationship between technology progress and market dynamics.
Keep watching—not just the price charts, but the code, the upgrades, and the community driving it forward.