Gas fees: How they work and how to pay less of them
By The Fire Team
TL;DR: Here's what you need to know about gas fees (and how to pay less of them) 1. Ethereum gas fees, which surge during periods of high network activity, can be mitigated by conducting transactions during less busy periods and utilizing Ethereum Layer 2 networks like Polygon, Optimism, and Arbitrum. 2.
Ethereum Improvement Proposal (EIP) 4844 introduces the concept of "proto-sharding", which could lead to faster and cheaper transactions by splitting Ethereum into smaller shards that require less blockspace and thus lower gas fees. 3. Account abstraction can further help reduce gas fees by introducing features like transaction sponsoring, allowing gas payments in any token, and single-click token bridging for automated transactions on Layer 2 networks.
the network is in high demand. During the 2021 NFT hype, gas fees could reach hundreds of dollars for a single NFT mint—and dozens of dollars for a simple transaction.
That made many transactions pointless, even if you wanted to stake, earn yield or claim an airdrop.
Why are ETH gas fees high?
Gas fees often surge under certain conditions, similar to how road congestion can cause delays.
When the Ethereum network becomes crowded during intense periods of activity such as during significant ICOs, NFT mints or DeFi fluctuations, demand for computational power increases.
Consequently, gas prices rise according to the fundamental economic principle of supply and demand.
How to pay lower gas fees
Just as traffic congestion usually decreases at off-peak hours, gas fees can drop when fewer individuals are utilizing the Ethereum network. Many people wonder when Ethereum gas fees are the lowest. There’s no answer to this that always works, but you can always find the current gas price using a gas estimator.
Therefore, if your transaction isn’t urgent, you might opt to process transactions during quieter periods to save gas costs.
EIP-4844: The key to lower gas fees?
EIP (which stands for Ethereum improvement proposal) is an innovation which promises to implement “proto-sharding”.
Sharding promises to make Ethereum more scalable by breaking it down into shards. These smaller pieces of the blockchain require lower gas fees because they require less of the total blockspace available on Ethereum.
EIP-4844 creates something called ‘blobs’, which can be added to blocks and create more space for transaction data. If you care about the technical details, you can read the proposal here.
If you just want to pay less in gas, know that EIP-4844 will have two main consequences for you:
Faster transactions
Cheaper transactions
But ERC-4844 is not yet implemented—and while we’re waiting for implementation, here are other ways to pay less in gas fees:
Layer 2 gas fees: Lower than on mainnet
Layer 2 networks are a solution for to pay less in gas. These networks, such as Polygon, Optimism, and Arbitrum, essentially create an additional route to facilitate transactions, thereby reducing the load on the Ethereum mainnet.
A new standard called EIP-4844 will make it possible to submit “blobs”, which will reduce the network congestion caused by a single layer 2 transaction and make transactions even cheaper.
L2 networks allow users to bridge tokens and operate many familiar protocols, but with the advantage of lower gas fees. It's an effective way to interact with the Ethereum ecosystem more cost-effectively.
While there are various layer 2s, most of them have far lower gas fees than mainnet. Compare the two gas fees above for the same transaction type (minting an NFT).
How account abstraction could help you pay less gas fees
Account abstraction introduces several significant features that have the potential to revolutionize how we engage with the Ethereum network. That also means it could transform gas fees. There are 3 main ways this technological innovation could help lower gas fees for users:
Transaction sponsoring: This mechanism enables a third party to cover your gas fees, which could be a protocol you're interacting with or a separate entity willing to sponsor your transaction. This feature eliminates the need for users to worry about gas fees during transactions.
Paying gas in any token: Traditional wallet structures necessitate paying gas fees in Ether (ETH). However, account abstraction permits the use of any token to cover gas fees. This flexibility is beneficial if you want to preserve your ETH and pay fees with alternative tokens.
Single click token bridging: Account abstraction could save you gas by allowing smart wallets to automate bridging and doing transactions on layer 2 (instead of doing everything manually) with a single click.
Gas fee limits: If you have a non-urgent transaction you’d like to make, but gas fees are too high to be worth it, you could authorize your wallet to approve that transaction as soon as gas fees go below a certain limit.
In summary, account abstraction presents a substantial advancement for the Ethereum network, enhancing transaction efficiency, cost-effectiveness, and user convenience.
If you’re exploring Ethereum, check out Fire!
We’re a trusted chrome extension that simulates transactions before you sign any potentially malicious smart contract.
By timing transactions strategically, leveraging Layer 2 networks, and utilizing the benefits of account abstraction, it's possible to navigate the Ethereum ecosystem without incurring excessive gas fees. As the Ethereum network continues to evolve, these tools and techniques will become increasingly important for users.
.png)
