High prices on gas fees are affecting tremendously the normal activity of transactions made by users on the Ethereum blockchain. So, when you are buying NFT artwork or any other token or cryptocurrencies not only you have to check the price of its cryptocurrency, ETH, but also the gas fee that you will need to pay in every transaction. This issue can raise the cost of the operation quite a bit. Learning how to deal with gas fees can save you up some good money.
Are gas fees becoming a problem?
Honestly, high prices on gas fees is not only bad news for users, but also for the whole NFT market. They are slowing down the development of the NFT industry. Many artists are hesitating to mint new NFTs while gas fees prices are high because it’s more expensive. Moreover for emerging artists, who encounter difficulties in launching their artwork because of gas fees, that becomes a barrier.
The problem has worsened by certain events. For example, the launching of the “Stoner Cats” NFTs. This is a limited edition NFTs released as part of the “Stoner Cats” show. Artists like Mila Kunis, Aston Kutcher support the project, and most importantly, Ethereum founder Vitalik Buterin. Investors that rushed to purchase the NFTs saw gas fees rise to as high as 600 Gweis.
But it hasn’t been the only time. Back in February, gas fees also took a pike. On the 23rd, gas prices hit $40.
How to calculate gas fees?
The gas fee is calculated by multiplying the gas price by the amount of gas required to make a transaction.
[Gas Fee = Gas amount x Avg. Gas Price x ETH Price]
Gas is measured in Gwei. Each unit of Gwei is equal to 0.000000001 ETH. Gwei is a unit of gas used to measure the computational effort necessary to perform concrete actions on the blockchain.
The gas price is calculated by supply and demand. It depends on how busy the blockchain network is, varying along the day, and even the hour. The more transactions taking place, the higher the price. Another factor that affects gas price is how fast the transactions need to be executed.
The amount of gas depends on the size and complexity of the transaction or the smart contract. The minimum amount of gas required to process a transaction is 21,000 gas.
What is the purpose of gas?
Gas has it’s purpose, and a very important one. Security. Gas is the reward miners receive on the Ethereum network when processing transactions. Or explained in another way, every computational execution needs gas to be done and needs to be paid to the miners.
This network has to run on gas so it can prevent users from collapsing it. This is because this network has a scalable problem, this means it only accepts a certain amount of transactions per second. The future update to ETH 2.0 is believed to mitigate this issue.
Tips to save money on gas fees
- Follow the market. Studying the development of the prices on a daily basis can help you know how prices are evolving and when is the best moment to make your transaction.
- Choose the urgency on which you want to operate. The most common wallets give three gas fee options: slow, standard and fast. The slowest is also the cheapest. But sometimes it’s worth paying more, because you need it to be fast.
- Gas markets decide if and when transactions will get confirmed. So, if you establish your gas price too low, maybe your transaction may get stuck or cannot be executed because it runs out of gas.