Analyzing Transaction Fee Patterns and Their Impact on Ethereum Blockchain Efficiency

Transaction fees play a crucial role in determining the efficiency and scalability of blockchain networks, particularly in Ethereum, where gas fees fluctuate significantly due to network congestion and competitive bidding. This study analyzes transaction fee patterns in the Ethereum blockchain and their impact on network efficiency by examining key blockchain metrics such as block density, transaction size, and transaction fee variability. The findings indicate that the mean transaction fee is 0.0342 ETH, with a median of 0.0008 ETH, demonstrating significant fee variability. The study also finds a strong positive correlation (r ≈ 0.75, p < 0.01) between transaction fees and block density, as well as a moderate correlation with transaction size (r ≈ 0.58, p < 0.01), highlighting the direct impact of network congestion on fee structures. Time series forecasting with Autoregressive Integrated Moving Average (ARIMA) and Long Short-Term Memory (LSTM) models reveals cyclical trends in transaction fees, often influenced by major network activities such as NFT releases, DeFi protocol surges, and high-frequency trading. The LSTM model achieves a lower RMSE (0.09) compared to ARIMA (0.15), demonstrating its superior predictive capability for fee trends. Additionally, anomaly detection techniques identify outlier transactions with fees exceeding 2.5 ETH, often associated with front-running strategies, priority gas auctions (PGA), and inefficient smart contract executions. Despite improvements introduced by EIP-1559, the findings indicate that Ethereum’s transaction fee market remains highly volatile, with block density fluctuating between 512.0% and 3896.0%, causing extreme fee spikes during congestion periods. The presence of large transactions (maximum size: 250 bytes) further amplifies fee inefficiencies, reinforcing the need for improved scalability solutions. This study underscores the necessity of Layer-2 rollups, dynamic block size adjustments, and more adaptive fee mechanisms to enhance blockchain efficiency. Future research should explore comparative studies across blockchain networks, advanced predictive modeling techniques, and the role of miner extractable value (MEV) in transaction ordering fairness. The study’s insights provide valuable guidance for developers, users, and policymakers aiming to optimize Ethereum’s transaction fee structure and enhance overall blockchain performance.