5 Ways To Reduce Crypto Gas Fees

Key Takeaways

• Strategically plan your transactions during off-peak hours or weekends to take advantage of lower network congestion and reduced gas prices.
• Consolidate multiple transactions into a single larger one to minimize the overall gas cost per unit of activity, especially when interacting with smart contracts and DeFi protocols.
• Streamline your transactions by optimizing smart contract code, using gas tokens and exploring alternative blockchains with lower fees like Solana or Cardano.
• Utilize layer-2 scaling solutions  to process transactions off-chain, significantly reducing gas fees and improving transaction speed.

Gas refers to the computational effort required to execute a transaction or smart contract on the blockchain network. Although gas fees are necessary for blockchain networks to operate, users are usually annoyed by their instability and propensity for outrageous surges. 

Gas costs can skyrocket during times of high network congestion, making transactions unaffordable and impeding the widespread adoption of blockchain technology. 

For example, the average transaction cost on the Ethereum network reached an unprecedented peak of $70 in May 2021. Simple operations like transmitting a tiny amount of Ether or using a DeFi protocol could cost hundreds of dollars or more during such times. 

This constituted a considerable barrier to entrance for many users, especially those with little means or those looking to perform smaller transactions. Sounds relatable? 

Keep reading to find out several ways to reduce crypto gas fees.

What Are Gas Fees? 

Gas fees are the lifeblood of the blockchain network. Blockchain networks like Ethereum require gas for transactions and execution of smart contracts. The miners and validators who safeguard the network and verify transactions are paid these fees, which are reimbursed in the blockchain’s native cryptocurrency.

The term “gas fees” was coined by the Ethereum co-founder, Vitalik Buterin and was inspired by the idea that computations on the Ethereum network require a form of “fuel” to operate, much like an automobile needs gasoline. This fuel, in the context of Ethereum, is Ether (ETH), the native cryptocurrency of the blockchain.

Every operation requires a particular amount of gas, such as exchanging tokens or utilizing a decentralized application (dApp). The amount of gas used multiplied by the gas price — which is set by market dynamics based on supply and demand — determines the total gas fee.

Why Are Gas Fees Important?

Gas fees serve several essential purposes:

• Incentivizing network security: They reward miners/validators for their computational work, ensuring the blockchain’s integrity and security.
• Prioritizing transactions: Users willing to pay higher gas fees can have their transactions processed faster, allowing for flexibility and priority during peak network usage.
• Preventing network congestion: By requiring payment for each transaction, gas fees deter spam and frivolous transactions, preventing the network from becoming overloaded.

Here are various strategies to reduce crypto gas fees

1. Timing Is Key

The Ethereum network experiences heavy traffic and congestion, much like a busy highway, especially during peak hours and days. When the network is busy, the demand for block space rises, pushing up gas prices as users fight to get their transactions into the next block. 

One can optimize gas fees by timing their transactions strategically using tactics like:

• Monitor gas trackers: You may learn a great deal about the state of the network and spot times when demand is low by keeping an eye on gas trackers like Etherscan. These platforms let you choose when to complete transactions by giving you real-time information on gas costs, outstanding transactions, and network congestion. 
• Off-peak hours or weekends: In general, there is less network activity on weekends and during off-peak hours, which lowers gas prices. By planning your transactions for these less busy times, you can save a lot of money on gas costs and ensure faster, more efficient processing of your transactions. 

https://x.com/stacy_muur/status/1764957849225138534 

2. Batch Your Transactions

On a highway, picture having to pay a toll for each and every mile you travel. It would mount up quickly! In a similar vein, carrying out numerous separate transactions on the blockchain might lead to accumulated gas expenses that drastically deplete your cash. 

Combining several processes into a single transaction is similar to batching your travels. This can significantly lower the total gas cost per activity unit, mainly when using protocols such as decentralized finance (DeFi) or smart contracts, which frequently call for several stages. 

Imagine you are a DeFi enthusiast who wishes to swap tokens, increase a pool’s liquidity, and stake your LP tokens to receive rewards. Each of these operations would usually require a unique Ethereum network transaction, resulting in gas costs for each. 

On the other hand, a platform like Zerion allows you to combine all three actions into a single transaction. This drastically lowers the total gas fees because you’re only paying for one transaction rather than three. 

3. Optimize Your Transactions

In the same way that a car with regular maintenance uses less fuel, optimizing your transactions can reduce their gas consumption. This means that developers should minimize needless complexity while building smart contracts by using efficient code and data structures. 

Users may need to investigate using gas tokens such as GST2 or CHI. Gas tokens, like CHI or GST2, are innovative tools that can offer discounts on Ethereum gas fees. They work by allowing users to purchase gas when prices are low and use it later when fees are high, providing a buffer against price volatility.

4. Consider Layer-2 Solutions

Layer-2 networks resemble traffic-light-colored express lanes on a freeway. They are built on top of already-existing blockchains, like Ethereum, and handle transactions off-chain, which drastically lowers gas costs and speeds up transactions.

Two popular layer-2 solutions include optimism and arbitrum, known for reduced fees for smaller transactions. Plus,high-frequency traders will find these platforms very helpful.

5. Explore Alternative Blockchains

If you’re not forced to use a specific blockchain, explore alternatives like Solana or Cardano. These networks have different consensus mechanisms and architectures, resulting in lower average transaction fees than Ethereum. 

However, weighing the pros and cons is crucial, considering factors like security, decentralization, and the ecosystem’s overall development before switching.

Conclusion

A combination of technology innovation, user knowledge, and strategic strategy can lessen the pain of high gas fees in the dynamic world of cryptocurrencies. Users can save gas costs by carefully scheduling transactions, streamlining operations, improving code, and looking into layer-2 solutions or other blockchains. 

The burden of gas fees is anticipated to decrease as the blockchain ecosystem develops and new solutions appear, further democratizing access to this ground-breaking technology and opening the door for a more equitable and effective financial future.

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