If you’re reading this, you’ve probably already heard about NFTs – the latest buzzword that has become the most vogue thing in the crypto industry. Non-fungible tokens, mostly used in the digital art world, have rocketed in 2021 and helped improve a number of various sectors. Not to mention a space they displayed for the creators and collectors to grow, gain profit, and fame. Yet, the good always comes with a price – so-called gas fees.
This article is for you, in case you have been wondering what gas means in the NFT community and need a broader explanation on how they operate and why they are required. Let’s jump in!
|NFTs – why are they needed and popular?|
|A non-fungible token is a unique and irreplaceable unit of data, held and stored on the blockchain. Art, music, GIFs, videos, or anything else can take the form of a digital token. This technology is often used to authenticate and ensure the ownership of original assets in the digital space, where the owner has a certificate in order to keep track of his token in the timeline. NFTs and their collections provide not only entertainment, self-expression, and satisfaction, but a passive income.|
What are NFT Gas Fees?
Most of the NFTs are created and stored on the Ethereum blockchain. Every time the transaction happens on Ethereum, it must be validated. Whether it would be an NFT being minted, purchased, or a one-time initialization fee being paid – that transaction must be approved. As a result, validating the transaction or adding data to the next block, takes energy. If you submit the transaction, you have to pay for it through a mechanism called gas.
So, NFT gas fees are simply the term used for the transaction costs that the marketplaces and trading platforms charge. Those who are new in the game of NFTs might say that the term “gas” does not make sense, but actually it was chosen for a purpose. As gasoline fuels a car and lets it drive, the same parallel proceeds with NFT gas – it fuels and manages the transactions in order to carry out different operations.
|Gas is measured in Gwei, which is just a subunit for a part, or tiny fraction of ETH. 1 Gwei = 0.000000001 ETH|
|Ethereum gas fees can be calculated by this formula: |
Gas units (limit) X (Base fee + Priority fee) = Gas fee
|One transaction requires a minimum of 21,000 gas units. Here the base price is equivalent to 200 gwei (0.000000000712 ETH).|
|The maximum amount of gas that an operation can exploit is defined as the gas limit.|
Scenarios of when you need to pay gas fee:
- Transferring crypto from one wallet to another;
- Purchasing an NFT on the marketplace;
- Accepting an auction offer;
- Canceling a listed NFT;
- Canceling a bid;
- Converting WETH to ETH (or visa versa);
- Freezing the metadata.
So, when you make a transaction, such as transfer crypto to another wallet or purchase an NFT on the marketplace, you ought to have enough ETH in your wallet not only for the initial cost but also for the gas fee. Moreover, gas fees take part in securing and preventing the digital market from scammers that release a lot of fake transactions, because generally speaking, each transaction does cost some Ethereum currency – ether (ETH). Thus, violators need to pay a high price for causing harm to the network. And not every scammer is prepared for that.
Reasons Why Gas Fees Fluctuate
Sometimes the gas prices are so high, that the NFT becomes less expensive than the fee. That is why gas fees are perhaps the most disliked aspect of NFTs. Nevertheless, this can be explained as there are a variety of reasons why gas fees range so extremely:
#1 Network congestion
It is simply a symptom of the success or congestion of the network: the higher the demand and traffic of the transaction validations, the higher the base market price will be for the gas. This means that as Ethereum becomes more and more popular, the cost of completing a transaction will grow in conjunction with it, due to the number of requests aggravating the network.
#2 Level of complexity
Gas fees also range due to the complexity of a transaction: simple Ethereum blockchain transactions are usually less pricey than complex validations. In this context, sending cryptocurrency to fill a digital wallet is considered a simple transaction, whereas minting the NFT is a complicated one.
#3 The time of listing
The time when the transaction is being submitted also determines the price of the gas fee. For example, the fees will be higher if the transaction is made during peak hours when there is a lot of traffic. On the other hand, the days of the week also matter – working days are perceived as busy in the transaction area, therefore it is advised to submit transactions on Saturday or Sunday.
#4 Speed of transaction
The desired rapidity of the transaction also plays an important role: When the transactions are submitted for approval, they are put into a queue, meaning that the transaction with the highest amount of gas gets validated first. This indicates that rather often people are willing to pay more for priority approval. Quite like buying a flight to Madeira and choosing priority in order to skip the lines, picking a seat next to the window, and having plenty of legroom. Only in the case of NFTs – it is the speed of transaction to go through the blockchain.
On the other hand, you can wait for it to happen naturally, but it might take a lot of hours or even an entire day for the fee to go through. Since NFTs are so popular it is a common attribute. In case you have not yet announced any launch dates to your community, hyped them up, and made promises - you don’t have to worry. However, in case you did, you must be aware of some possible postponing as the launch of your NFT collection might happen a day late.
|With some crypto wallets, there is a possibility to add extra gas to the transaction after it has already been submitted. This allows for the transaction to be approved quicker if needed.|
How To Prevent Paying High Gas Fees?
Luckily, there are ways to help prevent high payments for transactions. You can implement some of the following suggestions in order to minimize and save money on gas fees:
Keep notice of the traffic
As it was already mentioned before, timing is the key to avoid emptying out your whole crypto wallet on the fees. It is better to keep track of the marketplace before putting up the transaction because pricing is more expensive as network traffic increases. If there is a crazy hyped NFT collection drop at a certain time, you should also stay clear of the network. It is simply better to wait until the traffic of transactions quiets down before attempting to put your transaction through.
Try lazy minting
There are some NFT marketplaces that provide free minting, and token listing for sale without any gas fees. This practice has been called lazy minting and is best suited for beginners that only want to peek into NFTs trend or creators that have a limited budget. If you are looking for information on how to mint your first NFT for free, check out our article about lazy minting.
Merge transactions together
Combining a bundle of transactions is another way of preventing high fees. It’s not uncommon on marketplaces such as OpenSea, to see creators listing NFTs as gas saver bundles in order to help you group everything into the same transaction. In this case, you don’t have to pay fees for each NFT multiple times.
A comprehensive research into different marketplaces is highly recommended. It is worth spending some of your time investigating and comparing different NFT marketplaces since each marketplace does charge different gas fees.
Look at the prices and calculate
Consequently, it is obvious that you should overview the ETH prices, as they are the ones impacting the ultimate gas fee price. If Ether is high, it is guaranteed that you’ll pay more. Use tools, plugins, and platforms to check out the current gas prices, such as CoinMarketCap, ETH Gas Station, and EthGasnow for in-depth analytics.
Explore layer-two blockchains
There has been a development of several layer two solutions and Ethereum side chain platforms that can now overcome the limitations of Ethereum. For example, Polygon is a separate blockchain network built on Ethereum, that is way faster and cheaper than Ethereum. Polygon (also called the Matic network) has been attracting new projects, especially those in the gaming space.
Gas, at its core, is the processing fee that allows to create, sell and buy NFTs. These transaction fees are important in order to provide a fair and proper network of the blockchain. The Ethereum blockchain understands the issue and is attempting to reduce gas fees by switching from a proof-of-work (PoW) model to a proof-of-stake (PoS) one.
Until then, take advantage of the previously mentioned strategies to save a part of your budget. Artists can set gas limitations or trade when the market is calm. The lazy minting option allows new creators to pay only when the NFT is sold. On their journey to making it big on the blockchain, those that know the techniques of the trade can minimize their costs, and now, so can you.
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