What are gas fees?
If you own a bank account (we assume you do), you’ll know that there’s no such thing as free transactions. You’re charged a fee for every transaction, and some cost more than others — depending on the type of service (e.g. A.T.M, internet banking, P.O.S)
If you get this, then you already understand Gas fees.
Gas is a word used to describe the fee you pay to complete transactions on the Ethereum blockchain. You can read our refresher guide to understand how Ethereum works if you’re new to Breach.
Just like the fee you pay to complete transactions with your bank account, transactions made on the Ethereum blockchain require a gas fee to be completed. This includes transferring your crypto between different addresses, minting NFTs and crypto staking.
What is the use of gas fees?
Gas fees are an essential feature used to compensate Ethereum miners who verify transactions. This is similar to what banks do with transaction fees which are used to maintain your accounts and pay for other expenses.
However, unlike bank charges which are fixed, the price of Gas fees vary, making it tricky for everyone. Imagine spending $30 to send $50 or $100 to mint an NFT worth $50.
This is why everyone hates gas fees.
Why do gas fees cost so much?
One of the reasons for high gas fees is that Ethereum has become valuable over the years.
Less than five years ago, when the price of 1 Ether was around $150, you could transfer as much as $1 million worth of Ether and pay less than $1. Currently, 1 Ether is valued at $2900, which has led to a rise in gas costs.
Also, there are more than 2,000 decentralized applications (also known as dApps) running on Ethereum. As a result, vast amounts of transactions are now verified on Ethereum daily.
Many miners have taken advantage of this demand by verifying transactions with higher gas fees before confirming other transactions. In other words, if you spend low on gas fees, you may sleep there.
How to spend less on gas
While it is impossible to avoid paying gas fees when using the Ethereum blockchain, there are a few ways to reduce the overall costs.
The first method is to make transactions during periods when there is a low demand for Ethereum. Weekends are usually the best time for that.
You can also set a maximum gas fee limit on your transactions. This tells the Ethereum blockchain that the amount specified is the highest you are willing to pay as gas fee. Once the transaction is completed, you will be refunded the unused amount.
Finally, you can reduce your gas costs by using Layer-2 scaling solutions. Scaling solutions are platforms that allow you to make cheaper transactions on Ethereum. Some examples include Polygon and Harmony.
Now that you know all about gas fees, go ahead and show off your new knowledge to your friends.