Avoiding Transaction Fees on Ethereum

As the second largest cryptocurrency by market cap after Bitcoin, Ethereum is no stranger to transaction fees. However, as network congestion increases and demand for faster transactions increases, avoiding these fees is becoming increasingly difficult. In this article, we will explore ways to reduce your transaction fee costs on Ethereum.

Understanding Transaction Fees

Before we dive into the solutions, it is important to understand how Ethereum transaction fees work. When you send a transaction, your sender must pay a gas fee to the network to process the transaction. The gas price is determined by the block timestamp (i.e. when the block was created) and the number of incoming transactions.

Why are transaction fees so high?

The high transaction fees on Ethereum can be attributed to several factors:

• Network congestion: As more users join the network, the demand for transactions increases, resulting in higher gas prices.

• Smart Contract Complexity: The increasing use of complex smart contracts and decentralized applications (dApps) has increased transaction volume, increasing fees.

• Gas Price Inflation: Ethereum’s native gas token, Ether (ETH), is the primary currency used for transactions on the network. As demand increases, the total supply of ETH decreases, leading to higher prices.

Ways to Reduce Transaction Fees

Fortunately, there are several strategies that can help you avoid or reduce transaction fees.

1.
Use a wallet app with lower fees

Wallet apps like MetaMask and Truffle Suite offer more efficient fee calculation methods compared to traditional web wallets. These apps often use advanced algorithms and network congestion forecasts to optimize gas prices.

Example: Using MetaMask’s “Gas Price” feature, you can set a fee limit of 25 ETH or less, significantly reducing gas prices.

2.
Choose an optimized blockchain platform

Choosing a blockchain platform that optimizes transaction fees can help reduce costs:

• Ropsten: A proof-of-stake (PoS) network with a lower transaction fee cap compared to the Ethereum mainnet.

• Polkadot: An interoperability network that enables faster transactions on other chains, reducing congestion and fees.

3.
Optimize your smart contracts

Complex smart contracts can lead to higher gas prices. To mitigate this:

• Use efficient contract templates or write your own using the Solidity programming language.

• Reduce complex logic, as unnecessary calculations increase gas costs.

• Break large transactions into smaller, more manageable chunks.

4.
Avoid Network Congestion

Reduce network congestion:

• Keep up with the latest blockchain software updates to ensure the most efficient version.

• Popular blockchains are common, and tend to be less congested than others.

• Choosing a wallet with offline functionality, which allows you to send and receive funds without an internet connection.

5.
Consider using a second-party wallet

Using a second-party wallet can help reduce transaction fees:

• Enabling off-chain transactions by reducing the need to interact directly with the blockchain network.

• Optimizing gas prices by using more efficient payment processing methods.

Finally, while high Ethereum transaction fees are inevitable due to its increasing popularity and complexity, there are several strategies you can use to reduce costs. By using wallet apps with lower fees, choosing optimized blockchain platforms, optimizing smart contracts, avoiding network congestion, and considering using a third-party wallet, you can reduce the burden of transaction fees.