What are NFT Gas Fees?
If you are new to the NFT world, there’s a possibility that the main thing you’ve heard about are the exorbitant profits people are making off of them. However, you may not know the difficulties that arise when buying and selling digital art. For people who regularly trade NFTs, one thing that’s often on their minds are gas fees.
You can think about gas fees as payment for a middle man. That’s because every time a transaction occurs on the blockchain, it requires someone to perform the actions that verifies that the transaction occurred. This action not only confirms the transaction, but also acts as a safety feature, which disincentivizes people from spamming the network. The person who carries out this process is known as a “miner.”
Diagram of Ethereum gas fees
As you can see, miners are a critical part of the blockchain, and without users paying their gas fees, virtually all blockchains, such as Ethereum, wouldn’t work. So what makes NFT traders worry about gas all the time?
Unlike a traditional middle man that charges a set fee for their services, miners work on a supply and demand basis. That means when the network is congested due to high user volumes, miners will take the highest gas fee offer and process that transaction first, and work their way down. Users will also have the option to have their transaction go through faster by paying more.
How are Gas Fees Calculated?
The total price you will pay to verify your transaction in the blockchain is calculated with this equation: Max fee x (Base fee + Tips)
Why is Gas a Problem for Artists
Even though gas plays an integral role in the blockchain, it limits artists trying to break into the NFT world. Although there are many artists that have made an unbelievable amount creating and selling NFTs and can afford whatever gas fees are set, but that is not the case for most. Depending on the NFT platform being used, artists will need to pay some sort of gas fee for each of their creations, which they may not be able to afford when just starting out. On top of this, buyers will factor in gas fees when buying a piece of art, so although they may find the creator’s work to be worth its price, they might not feel the same when gas is factored in, ultimately affecting the creator’s ability to sell.
Tips to Avoid High Gas Fees
Although gas can not be avoided, there are ways to make sure the price you pay is on the lower side of the spectrum. Here are some tips that will help you save some ETH on your purchases.
Keep track of gas prices: Use gas tracking websites such as Etherscan’ gas tracker.
Simulate your transaction: Create a DeFi Saver account and simulate your transaction to see the real time gas fee
The Current State of Gas Fees
Even though crypto and blockchain technology has been a huge breakthrough in technology and many, including us, are excited about it, there are still many improvements to be made. In terms of the high gas prices, there are multiple solutions that have been made. Some potential solutions are layer 2 scaling, Eth 2, and EIP-1559. Although these three solutions are a step in the right direction, they each still have their own issues that have not completely fixed gas price issues. Until there is a solution to high gas prices, make sure to follow the tips we provided to save as much as you can on your next transaction, and keep supporting NFTs!
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