If you’ve ever looked into purchasing an NFT, you will likely have come across gas fees. On most NFT marketplaces, users will have to pay gas fees for buying, selling and even minting NFTs. But what exactly are they and why do we have to pay them?
Any transaction carried out on the blockchain is processed by ‘miners’ using powerful systems and a significant amount of electricity. The amount of technological effort that goes into this is what’s referred to as ‘gas’, hence the payment of gas fees to the miners. It’s a bit like the processing fees we’ve been used to with credit cards.
The cost of gas fees varies depending on the number and complexity of transactions – the more complex they are to verify, the higher the gas fee will be. The miners finding a successful solution to cryptographic problems allows for sets of transactions to be processed and added to the blockchain.
With Ethereum, the cryptocurrency mainly used to buy NFTs, you have to specify a ‘gas limit’ which is the maximum gas you are willing to pay for any transaction. The ‘gas price’ refers to the amount you are prepared to pay for a unit of gas, known as Gwei. Put simply, the total gas fee will then be the gas limit multiplied by the gas price.
How can I avoid high NFT gas fees?
Much like cryptocurrency and NFTs themselves, gas fees are constantly fluctuating in price as a result of various factors such as network traffic. If the transaction is equal to or lower than the gas limit, the transaction will go through and the blockchain will be updated. If the gas limit is set too low, the miners will prioritise the transactions that bring higher fees.
There are a variety of ways you can keep costs to a minimum. The main piece of advice is to plan ahead by looking into trends of gas fees. You may notice that network traffic is busier on certain days and times, resulting in higher gas fees. Ethereum gas prices have traditionally been lower at weekends.
If prices are low but you’re not currently in the market to invest in an NFT, you could also consider tokenising gas. You can then exchange minted gas tokens for Ethereum when prices are high, which you can then use to fund the gas fees.
Work is underway on Ethereum upgrades with a view to limiting these costs, but they’re still important to be aware of in the meantime. If you’d like to find out more about NFTs or would like to launch a project of your own, get in touch with Nifty today.