45. NFT Gas Fee – what is it? How can you reduce your gas fee?
Whether you own an NFT or have only heard of them, you know that the gas fee is an essential part of it. The fees are often very expensive. But for the NFT developer and user – and most are – they are just annoying. What exactly are these NFT gas charges? Why are they even necessary? In today’s lesson, we will take a closer look at this topic!
NFT gas fee – what is it?
NFT gas is a charge for validators who work to maintain security on the blockchain network. Without such a fee, validators would not be willing to use their ETH and maintain the security of the network.
Every transaction, including coining, buying, selling or transferring NFTs and cryptocurrencies, involves a fee. So, you can see that this is very similar to how credit cards work – they also charge transaction fees for transferring money to different accounts or paying bills.
What else should you know about these pesky fees? We most often talk about gas fees when we mention the Ethereum blockchain. Currently, it is the one with the most expensive fees, ranging from $5 to $500. It all depends on the type of transaction and the current demand on the network.
As mentioned earlier, the transaction fees and gas fees are paid to the validators. This is their reward for securing the network. Without this remuneration, there would be no reason to become such a validator and stake their ETH. In this context, some interesting facts about the total transaction fee should be mentioned.
The total transaction fee is the product of the gas limit and the gas price. If the transaction fee is equal to the gas limit, our transaction will be executed and the blockchain will be updated. Conversely, if the transaction fee is greater than the gas limit, our transaction is reversed.
How are gas fees calculated on the blockchain network?
Gas fees are determined by the current supply and demand on the network. The formula for the gas fee in Ethereum is as follows:
Gas unit x base fee + tip
When the demand for transactions is high, more miners and validators are needed to do the work. More work also means more energy consumption. Consequently, gas charges increase. However, if the gas price does not reach a certain threshold, miners may refuse to process the transaction.
Remember that gas is a basic charge on the Ethereum network. It is assigned a market price based on the demand of the network at a given time. This approach is to ensure efficiency and the best possible use of computing power. The amount of the gas fee also depends on the size of the transaction or even the speed at which it is to be executed.
Why do NFTs need a gas fee?
To reward validators and miners for their hard work. Not only when mining non-convertible tokens, but also when validating transactions. Remember, miners and validators use their own computing power. In return, like any other worker, they expect to be paid for their time and resources.
Gas fees also contribute to the functioning of the blockchain. If miners and validators are paid for their work, they will want to earn more gas fees, which increases the security of the entire network. A bigger incentive is a greater willingness of miners to devote resources to validating transactions to secure the blockchain. At the same time, this optimizes transaction speed as more computing resources are used for mining operations.
How can you reduce your gas costs?
- Only carry out transactions when the demand for transactions on the network is low.
There is no specific time for this. You need to monitor the network and do a transaction when demand is low on the network. It’s a good idea to use the Ethereum Gas Price for this – it allows you to estimate what time of day transactions are ‘cheapest’ or beat NFT.
- Set your own gas limit!
In your cryptocurrency wallet, you can change the maximum Gwei fee and set how much NFT gas you can pay as a maximum. Then no transactions will be processed unless the fees fall below the limit you set. As long as you have set a limit, you cannot start a new trade or reject a new NFT. So, this is not the best option for those who want to get things done quickly.
- Edit your transaction priority.
This is a very simple way to reduce fees. In your portfolio, literally ‘in the register’, you can set a particular trade to “low”, “market” or “aggressive”. Low priority is the cheapest and the slowest. Aggressive, on the other hand, is the most expensive, but also the fastest.
- Take advantage of Ethereum’s Layer 2 solutions!
Layer 2 is designed to help you scale by processing transactions outside the main Ethereum network. At the same time, the same security measures and decentralization are maintained as on the main network. For certain transactions – selling or buying NFTs – it makes sense to use a different blockchain. For some chains, the fees are very low, for others not at all.
The popularity of NFTs has skyrocketed recently. Technology offers them new markets where creators or NFT artists can practice their craft. However, everything comes at a price. If an artist is not aware of the costs involved in making and selling them from the start, he will lose out.
Every artist can set a gas limit or trade because there is little demand in the market. Those who know these tricks are perfectly capable of making money with non-exchangeable tokens!