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Ask CryptoVantage: How Can I Save on Ethereum Gas Fees?
No one likes paying fees and currently Ethereum users are beset by arguably the worst transaction fees in all of crypto.
The fees have been reduced somewhat since activity on the network has fallen during the bear market but at one point last year Ethereum users were paying up to $50 per transaction on bad days.
It’s one of the reasons that the Ethereum foundation is making major upgrades to the network over the next few years including the upcoming merge to proof-of-stake (which won’t really affect fees all that much) and the subsequent launch of sharding (which will help with scaling).
The problem is that the current proof of work mechanism requires higher fees when the network is congested in order for your transaction to be processed. Not only that, but Ethereum in its current state cannot guarantee that your transaction will be processed for the fee you paid. This is because the amount could become insufficient by the time it’s to be approved. This combination of factors causes Ethereum gas fees to be untenable at most times, even when the network isn’t congested.
How high are Ethereum’s fees compared to other networks? We’ll answer that along with how you can save on gas fees in this edition of Ask CryptoVantage.
Ethereum Gas Fees Compared to Other Networks
The easiest way to illustrate how high Ethereum’s gas fees are is to compare them to other network’s fees for the same transaction. For this example we will use just one type of transaction: a swap.
Currently to swap one asset for another using a decentralized exchange (DEX) on Ethereum, the lowest fee is just under $10 USD, with the average being over $10 and closer to $11. Should you be swapping $100 worth of an asset, you are paying about 10% in a transaction fee, which is extremely high.
When comparing this cost to other networks, it’s even much clearer that Ethereum has high fees. Let’s compare three other networks: Cardano, Solana, and Polygon.
Currently, the fee for making a swap on Cardano is less than 0.2 ADA, which is about 10 cents. The caveat here being that many DEXs on Cardano use a relayer system that costs another 2 ADA, but even with that additional cost, it’s still $1 compared to $10.
On Solana, the fee for making a swap, or any transaction is about $0.00001, furthering the gap between Ethereum fees compared to other networks. On Polygon, which can be used to access many of the same applications as Ethereum, the fee is less than one cent as well.
Clearly, Ethereum has a problem with high fees compared to other networks, so how can they be reduced?
How to Save on Gas Fees
There are a few ways in which you can save on Ethereum gas fees. This includes using other blockchain networks, checking a gas tracker, and, well, waiting for the proof of stake upgrade.
Use Other Blockchain Networks
This can mean either an entirely different ecosystem, such as Solana, Binance Smart Chain, Cardano, or Avalanche, or a layer-2 solution on Ethereum such as Polygon. All of the other ecosystems have essentially the same functionality as Ethereum, but with faster transactions and lower fees. Depending on your commitment to Ethereum as a project they could all be good options for you to try as alternatives.
Polygon (MATIC) is likely the best option for an Ethereum user who is looking to stay within the Ethereum ecosystem. This is because the Polygon network is compatible with almost all of the same decentralized applications (dApps) that Ethereum is. This includes Uniswap and OpenSea, Ethereum’s most popular decentralized exchange and NFT marketplace, respectively.
Alternatively, you could use Arbitrum or Optimism, two other layer-2s for Ethereum. Using a layer-2 blockchain network allows for faster transactions and lower fees because the transactions aren’t taking place on the layer-1 of Ethereum that can only process 15 transactions per second.
The downside of layer-2s is that you won’t have access to the same number of applications as mainnet Ethereum so you might have to bridge back and forth between layer-1 and layer-2 regularly (which also involves fees!).
Check Ethereum Gas Tracker
If you’re set on staying within the Ethereum ecosystem and paying whatever fees you may need to, then you’ll need to keep an eye on the Ethereum Gas Tracker that is available on Etherscan.
The tracker will show you the average gas fee for low, medium, and high priority transactions on Ethereum. It will also show you the average cost for various types of transactions on the network such as a swap on Uniswap or SushiSwap, a sale on Opensea, or adding liquidity to various DEXs.
We’ve compiled a list of the best Ethereum gas trackers so double check that to see if there’s one that might work particularly well for you.
It’s worth nothing that Ethereum fees tend to be cheaper during off-peak hours. You might get significant savings by doing your transactions late at night or on the weekend.
Wait for ETH2
Patience will be required for this one, but it may be the best option for those who truly believe in Ethereum in the long run. Once Ethereum is successfully able to implement the upgrade to ETH2 and become a proof of stake blockchain network, it will begin to reduce gas fees.
This is because there will be higher transaction throughput that will reduce transaction costs. Full throughput capacity will take some time to be fully rolled out onto the blockchain however, meaning that the fees may not be cheaper right at the merge. The upgrade seems to be within sight, with a tentative date of September 15, 2022.
Closing Thoughts: The Merge is Coming, But Fees Will Stick Around
Ethereum’s upgrade to ETH2 seems to finally be coming. With that upgrade, much of the tips on how to save on gas fees on Ethereum may become moot. However, we can’t say just how successful the upgrade will be until it occurs.
As this is the case, it may still be a good idea for Ethereum users to explore some of the options mentioned in this article, such as trying out other networks or using the gas tracker. Overall, it will be good for crypto if Ethereum launches its upgrade successfully.
