Today we explore not only what is making ETH transaction fees shoot up unreasonably high, but also a few of the most likely solutions to the problem, and tell what you can do now to save a few dollars in Ethereum transaction fees.
How to Save Money on Ethereum Transaction Fees
The Ethereum (ETH) network saw a 30% jump in transactions this morning as Uniswap, arguably Ethereum’s most successful DApp ever, released their UNI tokens to investors. Ethereum transaction fees had already been on the high side thanks to a steady influx of new users attracted to the DeFi craze, and were pushed up from 152 gwei to 650 gwei on early Thursday as major exchanges readied themselves for the trade of UNI.
As of now, median transaction fees are cheaper for BTC than they were ETH, meaning ETH’s short block lengths are now the remaining benefit of ETH over BTC in terms of viability as a currency. However, ETH’s “speed advantage” is now also being tested due to a steady, ever-accumulating backlog of unconfirmed transactions.
HOW TO CANCEL A STUCK $ETH TRANSACTION
Enable “advanced gas controls” and “custom nonce”
>find your stuck tx nonce on etherscan
>send a 0 $ETH tx *with a high enough gas fee* and set the custom nonce to the SAME as the stuck tx nonce.
- COFFEE TRADES☕ (@overheardcoffee) September 17, 2020
Ethereum indeed has fast block confirmation times, with each block lasting anywhere from 6 to 20 seconds on average. Over 600 transactions can fit into a single block, and with such a high transaction clearance rate you’d think that Ethereum could maintain its low gas (transaction) fees given the network’s ability to process over 100 transactions per second. However, things aren’t so simple in practice.
Every block reward pays 2 ETH along with whatever transaction fees are attached to the transactions included in the block. Most blocks contain anywhere from 5 to 9 worth of ETH in the form of gas fees, meaning the collected total to be made in fees is much more significant than the block reward itself. As the Ethereum network gets more users making more transactions, it gets more congested, meaning miners have the right to be choosy when selecting which transactions to include in their blocks. This means that those making transactions must now increase their gas level before sending a transaction if they want it confirmed as quickly as it was before.
For those who value speed and want to make sure their transaction is confirmed instantly, gas prices have soared all the way to $60 or even $100 in fees per transaction. The more people paying absurdly high gas fees, the longer it takes for those using (what were once) normal-sized gas fees to get their transactions confirmed. Some users report having transactions pending for 24+ hours while others have simply stopped
ETH is so congested and the fee is so high, I don’t know what the ETH Foundation is doing? Is it invisible? A transfer cost close to US$100. Is this the original intention of the blockchain? Cross-border transfers by banks are not so expensive. @VitalikButerin- jack keety (@JackKeety) September 17, 2020
Over a period of years, an entire ecosystem of products has developed on the back of the Ethereum network and is now thriving, worth billions in combined total market cap. Some of these projects are DAOs, some are survivors of the ICO era, and some — like DeFi — are launching the network to new traffic records. For the first time in its history, Ethereum is reaching what was previously hoped by its users to be a myth: a scaling limit.
There has been some speculation in the community that DeFi would be remade on the relatively languishing TRON and EOS chains, once hailed to be “ETH killers” and still looking to get in on a piece of the DeFi pie. However, ETH mastermind Vitalik Buterin has been more than happy to remind everyone about the eventual prospects of Ethereum 2.0, which he not only insists is right around the corner but will end scalability problems for good.
EIP 2982 by @dannyryan and @VitalikButerin was just added to GitHub: “EIP for Phase 0 of Serenity (eth2) major upgrade of Ethereum’s consensus mechanism from Pow to a sharded PoS.”Get those validators ready everyone, we’re close.- Justin Leroux (@0xMidnight) September 16, 2020
For those who can’t afford to wait for ETH 2.0 and need help fighting the problem of high Ethereum transaction fees now, there are a few different things that can be done:
1. Wait for off-hours before sending a transaction. The highest number of ETH transactions tends to correspond with the business office hours of the U.S. east coast, which means there is an uptick in ETH transactions during these hours (approx. 8 am to 5 pm EST). Sending an hour or two before or after these hours is recommended. Less traffic = lower transaction fees.
2. Use wallets with customizable gas fees. Most Ethereum wallets will allow you to set your own gas amount instead of going with a set or recommended amount. If you are not sending from an exchange or other custodial wallet, your ETH wallet will likely let you set the gwei you intend to pay for the transaction. In order to make sure you are paying the minimum amount of gas to assure a transaction is confirmed reasonably quickly (within 1 to 6 blocks), consult with a current gas fee tracker like ETH Gas Station.
3. Use intra-transfer capabilities when possible. Never do on-chain what you can do off-chain for zero cost. Several exchanges, casinos and even custodial wallets will let you send ETH to another customer for a zero fee. This means if you have their exchange/casino/wallet ID, you can simply send funds to it from your account, bypassing the need for a visit to the blockchain. Additionally, Ethereum devs have been focusing on developing 2nd layer solutions for off- or side-chain transactions for some years in anticipation of an eventual scaling dilemma; one of the most successful of which is GitCoin.
I just funded ~13 projects on gitcoin using @zksync rollup. *Much* cheaper than regular on-chain transactions.