Ethereum is the second most prominently traded coin on the crypto network. However, you must have noticed that the price of Ethereum is rising gradually. This is mainly due to a recent increase in gas fees.
There are several reasons for the increase in gas fees. So keep reading to learn about gas fees and how you can reduce them.
Overview Of Eth Gas Fees
Gas fees, in simple terms, is the transaction fee that a trader pays while buying Ethereum. Ethereum primarily uses Proof-of-Work as its consensus mechanism. In this mechanism, several miners compete with each other to solve complex problems. The miner who solves the problem fastest gains the authority to validate Ethereum transactions.
These validators are eligible to receive a transaction fee termed gas fees. For Ethereum, the gas fees are calculated using several gas fee calculators. The term ‘gas’ refers to the amount of effort miners put in to solve a complex problem on their computers.
ETH, Ethereum’s native currency, is used to pay gas fees to Ethereum miners. Wei is the smallest unit of ETH. Gas fees are usually charged in gwei, equal to 10-9 ETH.
7 Tips To Avoid Ethereum Gas Fees
Below are a few tips that can help you avoid gas fees:
1. Optimize the transaction timing
The gas price of Ethereum keeps fluctuating throughout the day. You can also notice that the gas price drops drastically just a few hours after your purchase. This might make you regret your decision of not waiting long enough. There also lies the chance of the opposite happening. This might create confusion in the minds of traders. Under such situations, you need to monitor the market stringently. However, this is extremely time-consuming and vague.
There are certain times, such as after midnight or on weekends, when you can get to see a low gas fee. Those are the perfect times to purchase Ethereum. Also, you can study Ethereum fluctuations from charts. This helps you estimate the time when the gas price is extremely low.
2. Take advantage of rebate offers
Some several apps and sites offer attractive discounts on the purchase of Ethereum. One such platform is Balancer, which offers a refund of up to 90% on the purchase of Ethereum. They minimize the gas fees as much as possible for the traders buying Ethereum from their sites.
Several other apps, such as KeeperDao, charge gas fees collectively for a group of individuals. This is advantageous as the gas fee shares of individual traders reduce significantly. Hence, you can very well look for such options to significantly reduce gas fees.
3. 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.
4. Monitor network congestion to avoid delays
Network congestion is a common problem a crypto trader must face during trading. This is crucial because any trading delay can lead to price fluctuations. As a result, this can hamper the profit a trader anticipates or expects from that coin.
You can continuously monitor the congestion and complete your trade as soon as you notice the congestion is comparatively low. One of the ways of doing this is checking the mempool of a network. This is usually the waiting area for a transaction before it is completed.
5. Benefit from gas tokens
A trader can use a gas token to save immensely from a transaction on miner fees and additional charges. You can easily earn gas tokens by deleting all the variable coins and transactions from storage. When gas charges are significantly low, it becomes extremely simple to mine gas tokens.
You can easily redeem gas tokens as ETH while processing your transactions. There lies a possibility of receiving gas tokens as rewards which you can later use as gas fees.
6. Calculate payable gas fees beforehand
There are several gas fee calculators that you can use to calculate the gas fees beforehand. These include Gas Now and Etherscan’s Gas Tracker. These are specialized tools to estimate the gas price beforehand easily. These tools provide real-time value, and hence the chances of error are much less. You can easily use them to determine gas fees that are extremely time-sensitive.
7. Switch to Ethereum 2.0
Ethereum 2.0 is a significant improvement over Ethereum on several counts. However, one of the most significant improvements is using the Proof-of-Stake mechanism instead of the Proof-of-Work mechanism.
In the Proof-of-Stake mechanism, the validator is automatically chosen if they own a significantly high number of a particular coin. While competing to become a validator, you do not need extensive computation or problem-solving devices. Hence, there are no or very nominal gas fees charged in trading Ethereum 2.0.
Reasons For Inflation In Gas Fees In Recent Times
The gas fees calculator takes into consideration a standardized demand and supply equation. Thus, if there is a high demand for Ethereum but a reduced supply, there are chances of inflation in gas fees.
At times miners can charge increased fees to validate a transaction if they have to mine Ethereum fast. This is mainly when there is a high demand for Ethereum and a low supply.
Conclusion
Crypto coins are expensive, and so are the associated charges. Hence, if you can cut down the cost by reducing gas fees, you must opt for one. This will ensure maximum savings apart from an extensive profit.
However, it would be best to research each technique thoroughly so that you are well aware of the security policies and do not compromise on safety.
