Cryptocurrency

Ethereum Gas Fees: 7 Helpful Tips for You

Ethereum Gas Fees: 7 Helpful Tips for You

I’ll go through Ethereum gas fees in depth in this article. I’ve also provided a practical example of how to modify gas fees in MetaMask for those of you who are beginners to cryptocurrency.

What Exactly is Gas?

 The cost for processing transactions on the Ethereum blockchain is known as (ethereum) gas. Do you want to transfer ETH between addresses? That transaction demands the use of gas. Do you want to create some NFTs?  You’ll need gas as well. What about trading ETH for a variety of tokens? You guessed it! More gas!

Anything using ERC-20 tokens (Ethereum-based tokens) necessitates the expenditure of little sums of ETH for gas.

In other words, even if you don’t want to keep any ETH, say, because you want to shift from the bitcoin evolution and trade smaller-cap altcoins, you must have some ETH in your wallet at all times to pay future gas fees. Ignoring it might cost you a lot of money!

Why Gas Fees?

Gas Fees are the Miners’ Reward

On the Ethereum network, transaction processing demands computer power, and gas is the fee paid to miners for providing that computational power.

Gas Fees Contribute to the Network’s Security

Gas fees also contribute to the Ethereum network’s security. The inclusion of a charge to each transaction prevents spam and accidental infinite loops.

How Gas Is Calculated

The previous method of calculating gas costs is shown below. Since the London hard fork and adoption of EIP-1559 in early August 2021, there has been a new technique, which I will discuss later, although it appears that just 1% of all Ethereum network transactions presently use it.

The price of gas is expressed in gwei (giga wei). Wei is the tiniest part of ether. In other words 1 ether equals 1,000,000,000,000,000,000 wei, 1 gwei equals 1,000,000,000 (1 billion) wei, or 0.000000001 ETH. This doesn’t seem so awful, does it? So, why are so many people upset about the cost of gas?

The cost of every given transaction is influenced by two factors: the current gas price and the amount of gas used for the transaction.

Prices for ether gas fluctuate regularly, and there are several places where you can check the current price.

I’ve frequently seen gas prices as low as 6 gwei and then get as high as 2,000 gwei. Why can they alter so drastically? It just depends on how active the Ethereum network is at any one time. The greater the prices, the busier the network.

Ethereum Gas Fees: Tips for You

Calculate and Research Your Way to More Affordable Gas Fees

When looking for gas prices, you’ll frequently find three or four distinct pricing dependent on transaction speed: rapid, fast, standard, and slow (or other similar names). Unsurprisingly, the faster the transaction rate, the more you will pay, and the price difference might be rather significant.

In general, while purchasing or selling tokens, you want to utilize the quickest option possible, especially if their price is fluctuating rapidly. If you’re simply moving tokens between wallets or purchasing tokens when the market is calm, you may choose standard or slow speed because it doesn’t really matter if the transaction takes a little longer to complete.

The amount of gas required for each particular transaction is the second consideration. The smallest transaction on the Ethereum network, such as transferring ETH between two addresses, requires 21,000 units. More complicated smart contract operations, like as purchasing other tokens or staking your tokens, demands way more gas.

It’s also worth noting that certain transactions need many stages, each of which necessitates a specific quantity of gas. Exchanging Tether (USDT) for Chainlink (LINK), for example, necessitates two transactions: USDT > ETH and ETH > LINK. If you wish to conduct a transaction like this on (say) Uniswap, you will only see an estimated gas charge for the first ‘step’ (USDT to ETH in this case), so don’t be startled by the additional cost of the second ‘step.’

Don’t Forget to Confirm Your Gas Limit

The maximum quantity of gas you are prepared to expend on any particular transaction is referred to as your gas limit. If the actual quantity of gas consumed is less than the limit you selected, the excess gas will be refunded to you. However, if your limit is too low, you will either be unable to execute the transaction or the transaction will fail, causing you to lose that gas. This is especially risky when trying to acquire a token when the network is busy and the price is changing quickly (for example, when the price is surging soon after an influencer post a video about the token you’re trying to purchase).

Do the London Hard Fork and EIP-1559 Solve the High Gas Fees Issue?

No, not really. Although I won’t be going into depth on the EIP-1559 upgrade, I recommend you watch this video or visit the Ethereum website).

What you should understand here is that the new gas fee structure is intended to make gas taxes more transparent and predictable, not decrease them.

Gas prices will be less unpredictable, with fewer abrupt spikes than previously, but they will not necessarily be lower. We will have to wait for Ethereum 2.0 or Layer 2 scaling solutions to see reduced gas prices.

Organize Transaction Types in an Effective Manner

Every transaction necessitates the use of gas, and different sorts of transactions need varying amounts of gas. If you use DeFi frequently, try bundling similar transactions wherever feasible to economize on gas expenses.

Assume you have two Ethereum addresses, Account1 and Account2, each of which has 1,000 tokens. You want to store all of those tokens in a vault so that a brand new dapp can profit from them but doing so from each address separately will cost roughly 1,000,000 units of gas (500,000 units for each transaction), which amounts to 0.23 ETH, or $658 at today’s gas rates.

To save costs, move the tokens in Account2 to Account1, and then lock all 2,000 tokens in a vault at once. That one transaction would need just 565,000 units of gas, totaling $372.

Assume, for example, that you wish to buy 1,000 tokens every week and store them in your vault. Each transaction would need 500,000 units of gas, which would cost 0.12 ETH, or $343. To save money, first perform some math: if the worth of the additional tokens you will acquire over the course of that week is less than $343, consider deferring locking more tokens until a later date.

While these tactics are straightforward, they are also easy to ignore in the heat of the moment.

 *At the time of this writing, 1 ETH = $2863

Check the network for congestion and, if feasible, prepare ahead.

The Ethereum Network never sleeps. While it can presently handle about 15 transactions per second, this is not always sufficient. As a result, when the system is under tremendous load, the number of pending transactions might skyrocket. During instances of high traffic, transactions may be exceedingly sluggish to complete or may be held up for hours before failing. Worse, if miners begin processing a transaction but the user-specified gas limit is insufficient to finish the task, the transaction will fail and the user will be charged for the labor done. A typical mistake made by cryptocurrency users is underestimating the amount of gas required.

Ethereum transactions can spike on particular days—and even at specific times of day—increasing Ethereum gas fees. Waiting until the network is quieter might be a smart strategy to save gas if the transaction is not time-sensitive. For example, a user may be allowed to wait to open or shut a vault but unable to perform a more time-sensitive exchange transaction.

Users may use tools like Ethereum Price to see a week’s worth of network activity in their local time zone and choose the optimal time to execute transactions. The figure below, which shows results in GMT for a recent week, shows that the weekend was calmer than weekdays, with weekday afternoons being the busiest.

Calculate the Ethereum Gas Costs Based on the Conditions

If network traffic is heavy and you can’t (or don’t want to) wait to execute a transaction, you can try to estimate the quantity of gas required to complete it. While most Ethereum wallets offer users with an estimate of the gas charge amount as well as the time required to complete a transaction, such figures are only estimations and, more crucially, do not take into consideration real-time network circumstances.

Investigate the Ethereum Layer 2 Platforms and Technologies

While users across the world wait for the complete Ethereum 2.0 update, additional “Layer 2” solutions are being developed to assist Ethereum in scaling. These include transferring transactions to Ethereum network sidechain 2 and a collection of technologies known as Rollups. In the near future, both can assist in slashing gas costs and enhancing customer experience.

Using Ethereum and DeFi to Their Full Potential

Because of Ethereum’s success as the most popular platform for DeFi apps, high gas prices can make simple blockchain transactions uneconomical for many users. However, when developers learn trading with new methods to construct and interact with dapps more effectively, they open the door for consumers to discover new ways to save money on gas fees.

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