I was having a conversation with a friend a few months ago. I've been using his wallet for quite some time. He informed me that I would have to stop using his wallet because the gas fee was too high, which he had waived for me. I had no idea what a gas fee was or how much it could be before this time. It made me realise that I might be the only one in this situation. So, why don't we look into what gas fees are and how we can reduce (if not completely avoid) them?

What is Gas?

Gas is the word used to describe the quantity of Ethereum's native cryptocurrency, ether (ETH), that the network needs in order for a user to communicate with it. By making it prohibitively costly for malevolent users to bombard the network, these fees serve to both protect the Ethereum network and reimburse miners for the energy expended in verifying transactions.

The thing that every Ethereum user detests the most is gas fees, although they are a useful tool for encouraging miners to continue confirming transactions and preserving network security. In addition to their general dislike of fees, people detest gas fees because, in cases where the network is congested, they can be ridiculously expensive.

So, let’s dive into what can make gas fees so expensive and what simple steps you can take to save money when interacting with Ethereum’s ecosystem.

The Functional Role of Base Gas Fee

The process of giving transactions on the network priority is heavily influenced by Ethereum's base gas fee. The minimal quantity of gas needed to carry out a transaction or smart contract on the network is indicated by the variable base fee.

The base gas fee rises with network congestion, increasing the cost of executing transactions. Due to the higher fees users must pay to have their transactions processed, this cost increase aids in transaction prioritization. Because many users won't pay these higher fees, this eventually lowers demand and helps to relieve congestion. The network is additionally shielded from spam and misuse by the base gas fee. Ethereum deters bad actors from flooding the network with pointless or spammy transactions by adding a cost to each operation. Because users must pay for each action they take on the blockchain, this cost serves as a deterrent. This guarantees that important resources are used effectively while also preserving the network's general security and efficiency.

Why Are Ethereum Gas Prices So Expensive?

Since Ethereum is one of the most popular blockchains, gas fees can be high because there is so much activity that the blocks are full and transaction fees increase with each increase in demand.

Ethereum gas fees aren't always exorbitant, but they have risen to extraordinarily high levels during previous peak periods, like the ICO boom in 2017 and the DeFi summer of 2020, when the number of projects in the space and Ethereum's value both sharply increased and caused congestion on the Ethereum network.

How to monitor Ethereum gas prices

By keeping an eye on the current Ethereum gas price, you can reduce the amount you pay for Ethereum gas. Would you say that would take a lot of work? It doesn't have to be; a plethora of web resources are devoted to monitoring Ethereum platform gas prices.

Etherscan, ETH Gas Station, and GasNow are a few of the best gas fee monitoring tools. Many cryptocurrency platforms also provide a gas monitor, either on their own or from a third party. For slow, medium, and fast transactions on the Ethereum network, each of these tools offers comprehensive information regarding Ethereum gas fees. Additionally, moving averages, historical data, and leaderboards listing the largest gas-guzzlers are available.

How to Reduce gas fees

Choose transaction type carefully

There are different types of transactions for Ethereum. So, accordingly, the gas fees keep changing. Before choosing the type of transaction, you must compare the gas fee associated with other types to ensure that you choose the transaction charging the lowest gas fees.

However, while comparing the gas fees, you must also consider other factors. It would be best to never compromise on transaction security while choosing low fees since there are instances where lower fees are associated with higher risks.

Accurate calculation of Ethereum Gas Charges

An Ethereum wallet is unable to estimate gas fees with accuracy because it does not account for real-time transaction congestion. If your transactions require speed, you can use specialized tools like Etherscan's Gas Tracker or Gas Now. These specialized tools assess the network's pending transactions before figuring out the gas costs. In the end, these tools save you a significant amount of money on gas costs and even help you avoid fines if you neglect to set the proper gas limits.

Switch to Layer 2

Reducing network congestion and gas costs is one of the main advantages of Layer 2 solutions. Layer 2 solutions lessen the number of transactions that validators must process by shifting a sizable portion of transactions off the main Ethereum network. reducing both the overall network congestion and the corresponding gas costs.

Although layer 2 solutions can be very diverse, they all require some amount of off-chain storage and/or processing. Sidechains, which are independent blockchains that communicate with the main Ethereum blockchain, are one well-liked strategy. Sidechains can process transactions more quickly and affordably than the main blockchain. To guarantee security and finality, sidechains periodically settle their transactions on the main chain.

Choose the best time to transact

One of the primary reasons for increased gas prices is congestion. However, throughout the day, there are variations in the amount of Ethereum transactions. There are times when the gas fee is less for the same transaction that cost more ETH a few hours earlier.

But studying about these kinds of cases can get boring. Additionally, because it will have to constantly check gas prices at different times, productivity will be hampered. As a result, visitors to the Ethereum Gas Charts webpage can see a comprehensive graph of weekly gas prices.

Take advantage of special offers

Using Ethereum projects and dApps that offer fee subsidies or minimal fees is one of the simplest ways to avoid Ethereum gas fees. Balancer is an excellent platform if you're searching for one of these. Up to 90% of the gas fee refund is provided by the platform in the form of BAL tokens. Balancer executes traders who stay inside the vault, reducing gas fees for high-frequency traders.

Conclusion

Gas fees are an essential and intrinsic part of cryptocurrencies, and it will take some time for them to lose their significant user base and cease to be a barrier to widespread adoption.

Fortunately, there is already ample evidence that Ethereum can resolve gas fee problems. You can manage your spending and ensure that your ETH gas fees aren't too high by choosing the perfect time to transact, switching to layer 2, gas tokens, accurate calculation of gas fees, etc.