NFTs aka Non-fungible Tokens comes with a cost. And that’s what we refer to as Gas fee.
I remember there were times when I didn’t go through the minting transaction, not because of the price of the NFT, but because of the gas fee.
Yes, they can go that high when blockchains are busy!
But anyways, how does gas fee work? Why is it too high sometimes? What if you don’t want to pay the gas fee?
We have a lot to uncover.
What is Gas Fee?
Any kind of transaction that you make on any blockchain costs money.
Whether it’s sending a Bitcoin to someone (you can send it to me) or minting an NFT (converting something into an NFT) on Ethereum blockchain or participating in a DeFi pool on Solana blockchain.
Why is that?
The way a blockchain works is when miners run their nodes (in the case of Bitcoin, it’s GPUs and in the case of Ethereum it’s committing ETH) to add all the transactions to the blocks, they need to get something in return for their work.
And that’s Gas fee.
How Does Gas Fee Work?
Let’s consider Ethereum Blockchain to understand how gas fee works.
Ethereum validators (the users who staked their ETH) verify and process the transactions on the network and hence they are awarded gas fee in return for staking their ether and verifying blocks.
So if I purchase an NFT on Ethereum from a marketplace like OpenSea, I’ve to pay the gas fee for the transaction to get approved.
Gas price on Ethereum is denoted with gwei (short for gigawei), which is 1 billionth of an $ETH.
So, 1gwei = 10^-9 * ETH.
In this case, the estimated gas fee is $4.12, and of course you have to pay that in $ETH.
How was this calculated?
Essentially, you pay a base fee for every unit of gas.
On top of the base fee, you add a priority fee, again per unit of gas, the value of which depends on how quickly you want the transaction to go through.
Gas fee = Gas limit * (Base fee + Priority fee) = Gas limit * (Gas Price)
In this process of paying the gas fee, you are basically bidding for your transaction to be included in the next block.
The higher you pay, the more interested the validators will be to validate and include your transaction in the block.
More money, Faster transactions!!
How To Reduce Gas Fee?
First of all, we need to understand that the gas fees is proportional to the amount of computational power needed for recording transactions on a blockchain.
So when there are many users trying to transact on a blockchain at the same time, the fee remain high, and who ever pays the highest, their transaction gets added first.
Now, let’s look at some solutions to reduce gas fee:
1. Different Blockchains
The amount of money you are paying also depends on which blockchain you are transacting.
So if you are looking to put your artwork out there and doesn’t really care about the blockchain, then why not go with blockchains that has low gas fee?
Try Solana. Or Polygon. These two are my go to blockchains, if not for Ethereum (I am broke because of this one!).
Even Binance Smart Chain, Tezos, Cardano, and Avalanche supports NFTs. When it comes to Bitcoin, there is something called Ordinals, but not that the fee ain’t that low.
2. Lazy Minting
Lazy Minting is a way to delay the minting process (putting your NFT on the blockchain) until right before the NFT is sold.
So if you are an artist selling NFTs, this can be a good process to try. Marketplaces like OpenSea already support this process.
You as a seller won’t pay the gas fee here, as it’s not minted yet until and unless somebody buys it.
Once the buyer purchases this list, the NFT gets minted, and will be transferred to the buyer’s wallet.
Note that this is for sellers only. If you are buying NFTs, you always have to pay the gas fee, no matter what.
3. Gas Timings
Until and unless you are minting a hyped NFT project, you can always delay the process of making a transaction when the fees are too high.
You can easily find the gas fee charts online on whatever blockchain you are using, and avoid making a transaction. For Ethereum, you can track the fee here.
Conclusion
NFT sales hit $25 billion in 2021 and the NFT Market will be worth $80 billion by 2025. Despite having to pay huge gas fee, the sales were tremendous.
And still, Gas Fee is one of the biggest barriers to entry in the Crypto & NFT space, which is why the industry is working on solutions like Layer2s and Lightening network.