In the world we live in, almost nothing is free. This applies to the crypto world as well and the gas fees are a sort of transaction fee that you pay the miners and validators to validate your transaction that took place on that blockchain network. For every transaction you make, you need to pay gas fees out of your pocket, making it an important aspect of your day-to-day crypto life. So, you must know everything about it.
This article will explore the concept of gas fees, and their key components, and specify how they are calculated. Furthermore, we will also give insights into how you can minimize them to a great extent.
What Is A Gas Fee?
The gas fee is the computational cost associated with conducting a transaction on the blockchain network, primarily used in Ethereum-based systems. There are mainly 3 types of transactions fast, standard, and slow. The fast transaction takes place in 30 seconds while standard and slow takes up to 5 and 30 minutes to get processed. The gas fee varies with the type of transaction that the user employs. The gas fee for a transaction is calculated using the following formula.
Gas Fee= Gas Limit x (Base Fee + Priority Fee)
Key Components
- Gas Limit: Maximum computational resource allocated to a transaction.
- Base Fee: A mandatory fee is set by the network employed by the user.
- Priority Fee: Optional fee to make your transaction processing mechanism faster.
Importance Of Gas Fees
The gas fees associated with the NFTs (Non-Fungible Tokens) and other crypto transactions are vital for several reasons.
- Network Security: Gas fees can greatly improve the security of a network. They can discourage malicious users from spamming the network to create unwanted traffic and congestion.
- Incentivization: Gas fees were mainly introduced to incentivize miners and validators to maintain and secure the blockchain network.
- Optimizing Transaction Speed: Gas fees can be used to optimize the transaction speed and when miners and validators are paid, they tend to use more powerful computer resources, which can speed up the transaction process.
- Fair Allocation: Paying the gas fee means the users can also contribute to the validation process, ensuring fair access to the network.
How To Pay Gas Fees?
To pay gas fees on a blockchain, you need the native crypto of that network in your wallet, which will be automatically deducted on the initiation of the transaction.
How Does It Work?
- Start The Transaction: When you want to trade crypto or interact with a smart contract, you will initiate a transaction.
- Setting Gas Parameters: After the transaction begins, your wallet will automatically calculate the gas fee associated with it based on the network you’re using.
- Deducting Balance: Once you confirm the transaction, the required gas fee is automatically deducted from your wallet and included with the transaction data sent to the blockchain.
Ways To Reduce Gas Fee
Paying gas fees is mandatory while initiating a transaction in the network. There is no way to bypass this. However, there are many ways you can employ to reduce this fee to a great extent.
1. Timing Your Transactions
Gas fees can vary depending on the congestion in the network traffic. If you select an off-peak hour to conduct your transactions, the transaction fee could be lowered to a certain extent. This is mainly during late nights or weekends. There are many tools like Etherscan that you can use to time your transactions.
2. Layer 2 Solutions
Many layer 2 solutions operate on top of the main blockchains and help reduce the load on the central chain. They can minimize gas fees by up to 90% as they process transactions off-chain. You can use these layer 2 solutions to your advantage.
3. Alternative Blockchains
Some blockchain offers lower transaction fees compared to others like Ethereum. Binance Smart Chain and the Solana Avalanche are primary examples of this. By using these chains for some transactions, you can mitigate the gas fee to a great extent.
4. Batch Transactions
This is one of the methods that you can employ to reduce gas fees. In this method, you combine multiple transactions into a single one to minimize the associated transaction.
Top Blockchains With Reduced Gas Fee
| Blockchain | Average Gas Fee | Minimum Transaction Time |
|---|---|---|
| Solana | 0.000005 SOL | 2-3 sec |
| Polygon | 5-10 Gwei | 3-5 sec |
| Binance Smart Chain | 0.005 BNB | 5-7 sec |
| Stellar | $ 0.00001 | 3-5 sec |
| Near Protocol | 0.001 NEAR | 2-4 sec |
| Skale | Zero Gas Fee | 1-2 sec |
Final Remarks
Gas Fees are one of the most important aspects of the blockchain network and are paid to the blockchain miners to validate the transactions. Essentially, they are rewards for validators, who contribute to the network’s security and are charged when a user buys, sells, creates, or transfers NFTs across the blockchain.
However, you should keep in mind that the gas fees can greatly fluctuate depending on network traffic and other factors. To use these factors to your advantage, you could employ the strategies in the previous sections when conducting transactions. For further information and updates on the crypto blockchain world, stay tuned.
