The introduction of EIP 1559 has reduced the Ethereum Transaction Costs by a considerable amount, however, it still keeps fluctuating. Also, network congestion during a high volume of transactions can make the transaction costs go higher. So how do you ensure that you select the Transaction Cost most suited for you?
To understand how we can manage transaction costs, we have to first understand the architecture and the vision of the Blockchains. Therefore, in this article, you will learn how you can save gas fees using ETH Gas Station.
Why Do We Need to Understand Transaction Costs?
Blockchains are essentially decentralized ledgers. The hardware is run by multiple unknown entities worldwide, also called validators. To motivate the validators, the network provides an amount of token to them as network fees. The network fee also ensures that there is less spamming with low-value junk transactions. For each transaction, this network fee is deducted from the sender.
For Ethereum, the network fee is in the form of ETH. When there is high volume, the validators of course will choose the transactions that have the highest fees associated with them. This leads to Gas War, higher transaction costs, and failed transactions.
What is Gas?
Gas is the fuel, in this case, that runs the Ethereum Blockchain. Each transaction needs some computational power to process and gas is the unit to measure that power. It can also be alternatively seen as the fee required to complete a transaction successfully in the Ethereum Network.
Moreover, gas price and gas limit are two parameters that determine the total cost of a crypto transaction. Gas price is the amount of ETH a user intends to pay for a transaction, where ‘Gwei’ denotes the Gas Price. Wei is the smallest unit of ETH. Gwei means ‘Giga Wei’ and is equal to 1,000,000,000 Wei. 1 Gwei equals 0.000000001 ETH.
Also, gas limits are usually standardized, while Gas Prices fluctuate with demand. A combination of both determines the total cost and the time needed for a transaction.
How to Find the Optimal Gas Price for a Transaction?
EthGasStation is a wonderful tool to understand the Transaction Costs at any point in time. A user decides whether the transaction should be:
- Fast, at a higher fee (usually applicable for participating in NFT Mints, IDOs, etc).
- Average/ slow, at a lower fee (applicable when the user has no hurry and wants to spend less in transaction fees).
The transactions are usually faster if you pay more. Also, if you pay less, the network can decline your transaction and the user can lose the Gas Fees. Therefore, EthGasStation has categorized transactions into 3 types:
- Safe Low: Safe low ensures that:
- Your transaction is successful (no declines)
- Validated at the cheapest possible price
- However, the transaction can take a longer time to validate
2. Fastest: Use this when you are in a hurry. Fastest ensures that
- All Top Miners accept the transaction almost immediately
- The user needs to pay more
- The network queues the transaction in priority much ahead of the others. The validation is faster.
3. Average: Average is a safe zone. The average price is calculated by the price that 50% of the top miners accepted in the previous blocks. Most wallets set this price as default.
How to Use the ETH Gas Station?
EIP 1559 has introduced the concept of Base Fee. This is a fixed fee for every transaction. The network burns this fee. This means that this is the fee required till the Ethereum block gets 100% full. Once it gets full, Ethereum goes back to its Legacy system, ‘First Price Auction’. The user now pays a Tip to the validators to prioritize the transaction.
Now, here is a quick guide on how to use it:
- Go to the ETHGasStation website. On the home page, you will find the current Gas Prices in each of the categories.
At the moment of writing this article, the Base Fee is provided below is 36 Gwei. In case the user wants to Tip, the Tip amount is on the left of the boxes. For Fast it is 2 Gwei, amounting to $0.13.
If it is very urgent, the user can also increase the Tip in Metamask. The Gas Limit remains standard at 21000.
The user can see the number of transactions at different Gwei ranges. In the below example there are a lot of transactions in the 20-50 Gwei range. If the user is in a hurry, he/ she should use >50 Gwei.
The confirmation time is higher for lower gas fees, as depicted in the below chart.
Using these parameters, the user identifies the gas fees, based on the expected speed of the transaction.
More About ETH Gas Station
Note: Eth Gas Station also provides you with a calculator. To use it, to need to go to Legacy Version, on the Left side Menu. Alternatively, click on this link.
Then, click on Transaction Calculator.
Input the Gas fees you have in mind. Then, when we go for cheap, only 49% of the last 200 blocks accepted this transaction.
If you select the fastest, the same number increases to 98%
Try with different Gwei numbers and see the percentage change!
Get $125 for SIGNING UP with MEXC Exchange (FREE $25 in your MEXC wallet + 1-month ACCESS PRO membership (worth $99). MEXC supports U.S Traders in all trading pairs and services.
(To get your ALTCOIN BUZZ ACCESS PRO membership DM us with your ‘newly signed up MEXC UID’ and ‘Telegram ID’ on our Twitter @altcoinbuzzio)
Moreover, for more cryptocurrency news, check out the Altcoin Buzz YouTube channel.
Above all, find the most undervalued gems, up-to-date research and NFT buys with Altcoin Buzz Access. Join us for $99 per month now.