Cryptocurrency is now becoming mainstream. You can always pay in cryptocurrency, whether you wish to trade Non-Fungible Tokens (NFTs) or buy food. Paying using cryptocurrencies, on the other hand, is a little more complicated. First, users are forced to pay gas costs while transacting on the Ethereum network. Users pay miners compensation for the computational power required to validate a transaction.
Gas prices, commonly known as “gwei,” can range from $5 to $150 in a matter of seconds. Its high pricing has been a sore spot for consumers who are devoted to Ethereum. In this article, we’ll look at gas fees, why they’re so high, and how to avoid paying excessive Ethereum gas prices.
Let’s start our journey by understanding what gas fees is.
What is a gas fees?
The gas fees is the fee, or pricing value, necessary to complete a transaction or execute a contract on the Ethereum blockchain platform. Priced in small portions of the cryptocurrency, ether (ETH) is referred to as Gwei, often known as nanoeth. The gas fees is used to distribute resources to the Ethereum Virtual Machine (EVM), allowing Decentralized Applications (DApps) like smart contracts to operate in a secure but decentralized manner.
How are gas fees determined?
The real gas price is determined by supply and demand among network miners, who can decline to complete a transaction if the gas price falls below their threshold, and network users looking for processing power.
Miners can refuse to execute a transaction if the gas limit (the maximum amount of gas costs a user is prepared to pay on the transaction) established by the user is not acceptable to them.
On Ethereum, the transaction fee is divided into three parts:
- Base fee: It is the very minimum amount required for a transaction.
- Gas limit: It is the smallest amount of money (configurable) that a user is prepared to spend for a transaction.
- Tip: It is a small fee you pay to get your transaction expedited by miners.
This is how it usually works: all of Ethereum’s unprocessed transactions are moved to the “mempool,” a memory pool. Then, miners select the transactions they wish to validate there.
The reason behind the high gas fees
Many blockchain software developers build their ideas on Ethereum, which is the most prominent blockchain for smart contracts. Imagine how these smart contracts can represent complete exchanges, NFT collections, DAOs, and Metaverses. Each of these unique protocols or initiatives has the potential to handle millions of transactions each day.
The maximum block limit is gradually reached when users of various projects conduct transactions and other procedures on the identical blockchain. Users that want their transactions processed quickly may pay additional tips, making the process of being included in a block even more competitive. On some days of the week, when there is less traffic on the blockchain, it is feasible to get comparable cheap gas fees. However, transactions on the blockchain can quickly fill up space, increasing gas prices over time.
Tips to avoid high gas fees
Here are four ways you can spend less on gas on Ethereum:
- With DeFi saver, use simulation
You won’t know the actual cost of gas until you complete the transaction and pay for it. You might, however, imitate your transactions with the DeFi Saver software. You’ll need first to develop an Ethereum activity process and then run it virtually.
The real-world simulation will give you a due and maximum gas fee in ETH. You may then tailor your entire approach to save money on gas. Execute your method on the Ethereum platform now to save money on gas.
- Optimized smart contracts
The smart contract can be optimized, which is a less extreme method. However, the more complicated the smart contract, the higher the cost is. As a result, a smart contract should be as straightforward and concise as possible. Remove all unnecessary functions and examine the code to see if it can be reduced. Perhaps even test whether some operations, such as whitelist management, could be performed outside the smart contract.
- Using Layer 2 scaling solutions
Due to congestion, transactions on the Ethereum Mainnet (layer-one) are costly. Therefore, layer-two solutions are available to assist users in scaling up transactions.
On this network, layer-2 uses technologies like Rollups and moving transactions to sidechains. As a result, this new procedure saves money on gas and speeds up transaction completion. Some well-known layer-two scaling options include Optimism and Arbitrum, as well as Polygon.
- Utilize your gas tokens
You may earn ETH as refunds when you erase your storage variables on the Ethereum network. It is the backbone of gas tokens. When the gas costs are cheap, you can mint a large number of gas tokens.
Redeem your gas tokens into ETH when you need to complete a network transaction. Then, use the ETH you’ve been given to pay for the gas.
Whatever operations are carried out on Ethereum, the scalability issue will continue to exist for many years. Therefore, avoiding excessive Ethereum gas prices is an excellent project to take on at any time.
With the above-mentioned tips, you can always spend lesser Ethereum gas fees when minting your NFTs or transferring tokens as quickly as possible.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn’t represent any investment advice or WazirX’s official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.