The share of Bitcoin transactions that utilize Segregated Witness (SegWit) has steadily grown from August 2017 when it was activated to more than 40% a year later. However, in the past five months, the growth of Segwit adoption appears to have stalled as the share of Segwit transactions stays in the range of 40-50%.
Segwit is a soft fork protocol upgrade to fix all forms of malleability and increase the block capacity. The Segwit transactions use different signatures and redeem scripts that are moved to a new structure, which doesn’t count towards a block size limit of 1MB. Depending on the parameters, Segwit transactions are at least 25% smaller in size when compared to legacy transactions. Therefore, the blocks are still the same size but they can fit more Segwit transactions. Since they are smaller and the fee is determined by size, the Segwit transactions naturally cost less. Basically a smaller fee can achieve the same speed as legacy transactions.