Transacting on blockchain may seem a little too complicated. And with the added jargon, newbies might get too overwhelmed and discouraged to dive deeper.
One of the most complex jargon that puts people off is Gas Fees.
Let’s get rid of the Gas Fee fear, shall we?
What are Crypto Gas Fees?
In simple terms, “Gas fees” are transaction costs that miners pay on a blockchain to get their transaction going. A typical supply and demand mechanism governs the system. Miners can choose to have the transactions that spend more if there is a higher demand for transactions, forcing users to pay more to handle their transactions quickly and effectively.
These fees are limited to and are meant to be paid for the transactions on the Ethereum Blockchain.
Crypto Gas Limits
- A typical ETH transfer necessitates a gas limit of 21,000 units.
- The amount of Gas Fees you’re ready to pay, the quicker your transaction is executed.
- Requests that are willing to pay higher gas fees are given a higher priority. If you pay 40K in gas fees, your transaction will be executed with the 21K units, and the rest will be returned to you.
- If you prefer to pay a lower gas fee, be prepared for your transaction somewhat longer and may not be executed as well. Hypothetically, if you specify 20,000 units of gas for a transfer, your 20,000 units will be consumed, and your transaction will remain incomplete.
How do gas fees work?
- Before you begin, Gas units must first be converted to Gwei, the unit in which gas fees is measured.
- Enough that if the threshold amount of gas required to process a standard transaction is 21K gas units, that figure must be multiplied by the average gas cost in Gwei to determine how much ETH is required for the transaction.
- There is indeed a gas fee for the network to function correctly. Without a gas fee, a user could theoretically execute a programme that never ends, intentionally or unintentionally, which could halt the entire Ethereum Network.
- While this prevents network attacks, it does imply that not paying sufficient gas for a transaction can result in financial penalties and losses at your end.
Why are Crypto Gas fees so high?
Considering Ethereum is one of the most widely used blockchains, gas fees can be exorbitant. The Ethereum chain has so much activity that the blocks fill up, and transaction fees grow with each increase in demand.
Ethereum gas prices aren’t always this high. Still, they have soared to absurdly high levels in the past. Especially during the 2017 ICO boom and the DeFi summer of 2020. When the value of Ethereum and the number of projects in the area skyrocketed, clogging the Ethereum network.
New business models will arise if the Ethereum blockchain can be scaled to execute more transactions at a reduced cost.
Why do transactions take so long?
As all users bid for block space, if your gas fee limit is set too low, miners may decide not to include your transaction in a future block.
As a result, your transaction takes so long because the gas fee wasn’t too attractive to be included in a subsequent block. You’ll have to wait for other users’ gas fees to drop before yours becomes attractive to miners.
How to avoid High Gas fees with NFTs?
NFTs have taken the world by storm, and with newer projects on the horizon, gas fees are eating up a large portion of your income.
This can result in a reduction of profit margin or possibly a loss for first-time buyers and sellers. For example, some customers have lost over $150 in gas fees while purchasing an NFT valued at only $25 in Ether.
Thus, avoiding these gas fees is an imperative mission!
As mentioned earlier, heavy traffic drives up the gas fee. Planning your purchases can cut down these costs significantly when the traffic is at a minimum.
Using free analysis tools to calculate gas fees in advance can be quite helpful!
Monitoring gas fees
You can receive tailored notifications when the gas price reaches your chosen level by just entering your name and email on a watching agent site. This relieves the stress of keeping an eye out for the desired pricing and minting your NFTs when the gas price is where you want it to be!
It’s not Ethereum’s fault that it has gotten so popular with time. Switching to other promising blockchains such as the Binance Smart Chain may help in scaling transactions across platforms.
Gas fees are considerably lower with newer and better projects available on board.
Combining similar transactions is another simple approach to saving gas. This is because the amount of gas used fluctuates based on the transaction.
Adjust your software
In cases such as new launches, waiting is not an option. You have to grab the opportunity to mint that NFT asap. For that, use the advanced gas control section of your Metamask wallet to modify some of the gas price factors to achieve a reduced charge.
Other variables, such as the Gas limit, should not be changed; this is a value acquired by Metamask from a marketplace’s smart contract, such as Rarible and Opensea, which mints the NFT.
Along with that plenty of hidden costs combined with gas fees make these transactions so expensive. Therefore, planning and executing well in advance would help you save these costs.