Transaction fees on different blockchains, how to lower them, and how to adjust in your crypto wallet in a few taps.
What are transaction fees on a blockchain?
A transaction fee is the amount of crypto that you pay to the network as compensation for processing their transaction on the blockchain. When you initiate a transaction, for example, send 1ART to your friend, the transaction needs to be verified and added to the blockchain ledger by network nodes.
https://oneart.digital/en/blog/what-is-a-blockchain-how-does-it-work
This requires time, stake, computational resources, and energy (depending on the consensus). Miners or validators are incentivized to process transactions by earning transaction fees. In fact, it’s similar to money transfer commissions when you pay providers for sending your funds.
Why do you have to pay fees?
Initially, fees were implemented on Bitcoin to ensure the miners check and approve transactions correctly. Following the rules must be more profitable for a miner than undermining them, the whitepaper explains. So, you pay to be sure the network is secure and nodes don’t confirm malicious transactions.
Ethereum docs make commissions much more important: its fees (aka gas) are considered the network’s crucial component. As developers explain, they are sort of an energy source that fuels the blockchain. And that’s understandable since Ethereum is not only a payment system but also a foundation for smart contracts and dApps.
https://oneart.digital/en/blog/what-is-ethereum-how-does-it-operate
How are fees calculated?
The way fees are calculated and the cryptocurrency they’re paid in depends on the network. Let’s check some of the popular ones.
Ethereum
On Ethereum, fees are called gas and paid in ether. The latter’s price is too high to calculate small fees, so the network uses Gwei to denote gas. 1 Gwei = 10-9 ETH.
Gas used * (base fee + tips) = fee you pay in total.
- A typical ether transfer uses 21,000 units of gas.
- The base fee depends on that from the previous block.
- Tips (priority fees) depend on how much you’re willing to pay to make validators confirm your transaction faster.
As of March 11, 2023, the average gas price is 101.26 Gwei.
BSC
BNB Smart Chain uses a similar scheme, where 1 Gwei = 0.000000001 BNB. As of March 12, 2023, the average gas price is 6.5252 Gwei.
Avalanche
Avalanche “gas fees” follow a different flow. Commissions on its P-Chain and X-chain are constant and depend on transaction types.
Source: Avalanche
Fees on the C-Chain vary due to the network activity: they increase when the network is overloaded and vice versa.
Polygon
Polygon is sometimes called a sidechain or Layer 2 solution based on Ethereum. It was developed to provide scalability and cheaper transactions. Polygon enables the processing of transaction batches independently, thus removing the burden of Ethereum processing all files alone. By conducting transactions outside the main chain, Polygon enhances the speed and efficiency of Ethereum and lowers costs.
Polygon gas fees are also denoted in Gwei. 1 GWEI = 0.000000001 MATIC.
Your fee = (base fee + tip) x limit. As a rule, a limit of 21,000 units is enough.
To check if you don’t pay too much, use a tracker. As of March 13, 2023, the average fee is 62.125 MATIC.
Fantom
On Fantom, gas price is also measured in Gwei. 1 Gwei = 0.000000001 FTM.
The fee you pay = gas unit price x amount of gas. The first criteria changes over time, while the second is a constant for different transactions. A simple transfer would cost you about 0.00079 FTM. To check prices, use FTMScan.
Why are crypto gas fees so high?
Fees vary due to network congestion, transaction size, and the transaction speed you choose. It works like Uber: the higher the demand, the higher the price.
Ethereum fees have lowered since the Merge, but it still tops the chart in terms of prices:
Source: Cryptoneur
How to lower Ethereum and/or other blockchain fees?
- Choose the right time. Use the scanners mentioned above to check the prices.
- You can lower transaction fees by setting a lower gas price, but this may make your transaction slower.
- Use L2 solutions. They will allow you to conduct transactions on a separate chain linked to Ethereum. These networks can offer faster processing times and lower fees.
https://oneart.digital/en/blog/layer-0-3-all-blockchain-layers-explained
How to adjust fees in OneArt?
Just tap “Transaction speed” and choose low, medium, or high. If you want to input the number manually, tap “Custom.”