Just in case you notice that the cost of investing is much higher than bare returns ?
This is the thing we face most of the time!
Not assessing the costs can wash off your returns without even you knowing the real implications.
Therefore cost minimization is an important tool in maximising your returns.
What is Ethereum gas fees?
Before proceeding, we should first have to learn about the term “Gas”.
Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network.
As the revolution of cryptocurrency is framing new records, it is essential to talk about the cost of acquiring this return giving asset as well.
So what is the cost? And why do we have to pay for it?
Just like in banks, where human resources are used to process your transactions including transfers or deposits.
Blockchain technology uses energy for processing every transaction related to buying, selling, transfer of cryptocurrencies. And miners pay certain amount as the cost of trading to perform these transactions which is known as “gas fees”.
With each transaction, the gas fees is levied depending upon the amount and frequency.
Thinking about how the gas fees is determined?
The amount of gas fees depends upon the demand and supply sources of such platforms.
The gas in the Ethereum blockchain is deposited in the standard form of ETH.
Ensuring that no unnecessary amount is forced out from consumers pocket, the platforms provides complete rights to know the gas fee prior to the transaction and then either accept or reject the transaction.
Gas fees are generally charged in smaller units of ETH known as gwei, where the value of 1ETH in terms of gwei is 1ETH=1000000000 Gwei.
In real scenarios value of ETH in terms of Gwei is not static and changes according to market situations. For calculating these values, you might need a daily updated value calculator.
Simply let us assume that we need to transact 50000 units of ETH.
And the price of 1 unit of ETH is $1500.
In case the gas price ongoing in the market is 95 gwei,
The total cost would account to :
Total units cost = 50000*95 = 4750000 gwei
Total units cost = gas* gas price
This implies 0.000475 ETH (when 1ETH=1000000000Gwei)
Total cost =0.000475*1500
This calculation totally depends on units transaction and prevailing gas fees unit and the speed mode you choose for the transaction.
How to get low gas fees?
Here are a few ways that can help you optimize your gas fees with your returns goals :
Witnessing the fact that the crypto market is highly volatile and therefore its demand-supply combinations are volatile too.
Knowing that gas fees depend on demand-supply mixtures of the market, the gas fees are also fluctuating in days, hours and even in minutes.
Therefore optimising the time and finding the best time with the lowest fees will impact your pocket positively.
You just need to mark the trends for some time. It is usually believed that gas fees are lower on weekends than the regular weekdays.
D-apps and discounts
Very often nowadays, you encounter the whole new tactic of promotion under blockchain apps. New startups and web apps, provide high-level discounts.
Apps like Balancer, KeeperDAO and much more giving out decentralised financing(DeFi) facilities provide discounts over gas fees.
The discounts can be over a certain percentage of maybe for a set amount.
Putting tokens at best use
When you delete your storage variables on the Ethereum network, you can earn ETH as refunds. These refunded tokens can be minted when the gas fee is low, they provide a base for gas tokens.
Similar to discounts, you can avail these tokens while paying your gas fees.
Redeem the tokens and hence save your money.
Similar to servers, the network can take time to execute the transactions. This might happen due to the heavy load of transactions in the pipeline at peak hours of market trading.
By the time your transaction is executed, the gas fees can be increased or decreased depending on time and market volumes.
To avoid giving these hiked gas fees due to delays in processing, you can keep the track of heavy load timings and price records to initiate transactions accordingly.
Losing money just because of wrong calculations or deviated calculations is quite hurtful and silly.
For this, the solution is good and quality high-speed real-time gas trackers.
Paying wisely is paying at the right time to minimize the cost and maximise the gains, trackers with good standards can help you track the prices on the spot.
As discussed above the heavily loaded first layer network of Ethereum can cause such a pocket hole.
To avoid the hole, you can use apps and technologies that shift your transaction to side systems named ‘two layers’.
Layer two here means by using various apps, you can accelerate your transactions at a faster speed. This happens when these applications shift your pending transaction to a different less busy route over the same technology.
This layer two will help execute orders faster and keep supply-demand a bit stable.
Some examples of such solutions are Optimism, Arbitrum.
Defi savers are options that give you autonomy to produce a transaction stimulation without carrying out the transaction. Line up the transaction on DeFi saver and get to know the market better.
You can have a sample transaction scenario where you can punch in all details and perform relevantly useful decision insights.
Knowing the ways to save money in gas fees fee can give you an extra edge to invest ore.
The low cost of investing is attractive and can increase the consumer base of cryptocurrencies in the near future.
Saving from any source is just as important as earning. Therefore being aware of ways of reducing costs can be the saviour of all times.