Gas fees, a term specific to Ethereum, are often used to describe service fees for other blockchains. Ethereum, being the most popular and widely used blockchain, is particularly favored by NFT marketplaces and decentralized apps (dApps).
Gas fees serve as the processing fee for a blockchain. To perform actions like buying, selling or tokenizing on the blockchain, a gas fee must be paid. This fee acts as a deterrent for malicious actors who may try to flood the network with fraudulent transactions.
Why are gas fees necessary? It’s simple: no market operates without fees, not even decentralized ones.
Gas fees power blockchains
Blockchains are networks of nodes or computers that work together to validate data and form it into blocks. To process transactions and add data to these blocks, power is needed, and this is where gas fees come into play.
By paying a gas fee, you ensure that your transaction is processed by the nodes and included in the next block. This can include actions like minting, transferring or executing a smart contract.
The complexity of the transaction greatly affects the gas fees you pay. Simple transactions consume less gas and result in lower fees. Gas fees are paid in ETH, the native currency of Ethereum.
How much are gas fees?
Gas fees can range from $1 to $1,000, depending on the difficulty of the transaction and network congestion.
Factors that influence NFT gas fees:
- Transactional complexity: Different transactions consume varying amounts of gas, with simple network transfers being less expensive than complex smart contracts.
- Network congestion: During periods of high network demand, the cost of processing a transaction can increase. This can happen if more and more apps are built on the Ethereum platform.
- Processing speed: The gas price can also vary based on how quickly you want the transaction to be completed. Faster processing means higher gas fees, while slower processing results in lower fees. This is similar to paying more for express shipping compared to standard shipping.
How to calculate NFT gas fees
The formula for calculating gas fees:
Gas units (limit) X (Base fee + Priority fee) = Gas fee.
Gas prices are expressed in “gwei,” which is a unit of ETH. Each gwei is equal to 0.000000001 ETH. A minimum of 21,000 gas units is required to process a transaction, which results in a base price of 200 gwei (0.000000000712 ETH).
The complexity of the transaction, not the amount being transferred, determines the gas price. For example, the gas price for transferring $10 worth of ETH to another wallet is the same as for transferring $1,000,000. A simple transfer has a gas limit of 21,000 units and a gas price of 200 gwei or 0.0042 ETH, which is paid to the miner.
You don’t have to manually calculate the gas fee for each transaction. Your crypto wallet will automatically calculate the gas price, and you can choose to accept or decline the transaction.
Transactions that require a gas fee include:
- Minting an NFT
- Buying an NFT
- Transferring an NFT to a wallet
- Sending cryptocurrency to a wallet
How do you mint NFTs without paying a gas fee?
Gasless NFT minting is possible on some NFT marketplaces, such as Mintable. However, this often comes with a trade-off, such as a higher seller fee or a gas fee after the NFT has been sold. For example, Mintable charges creators 5% of the final price for gasless NFTs, compared to the standard 2.5%.
Ways to Reduce High Gas Fees
Timing is key – Make transactions during off-peak hours when there is less demand on the blockchain. Weekdays are usually busier, so try to avoid those days.
Keep an eye on ETH prices – Gas fees are paid in ETH, so if the price of ETH is high, expect to pay more for gas. Stay informed by checking market values on platforms like CoinMarketCap.
Opt for slower transactions – You can save on ETH by choosing a slower transaction if you can wait for the additional processing time.
In conclusion, gas fees are a part of operating in the blockchain market, whether it’s for minting NFTs, selling, or purchasing them. It can be a challenge for new artists when gas prices are high, but costs can be reduced by careful planning, market research, and choosing platforms that offer gas fee subsidies.