Ethereum’s growth has been phenomenal, and its DeFi capabilities make it the one of the biggest blockchains. However, at the same time, the cost of being an Ethereum user has made it difficult for some to operate on the chain.
This led to the creation of Layer-2 chains and cheaper L1s. Ergo, the question – Can Ethereum’s recent fee drop change the tide once again?
Ethereum set to defeat Polygon?
Now, while the use cases of the second biggest blockchain in the world will never be lower than that of Polygon, Polygon cannot be surpassed when it comes to operating costs.
Recently, Ethereum’s fees fell to its lowest mark in over two years, with the average cost of a transaction dropping to 0.77 ETH – A level last seen in October 2020.
On the Ethereum gas fee tracking page too, at the time of writing, the base fee for a transaction on the chain seemed to be averaging at 7 to 8 Gwei. On the contrary, NFT and DEX transaction fees were around $1.52 – $4, at press time.
Ethereum gas fees | Source: Etherscan
On the contrary, Polygon’s base fees today ranged from 40 Gwei to 66 Gwei. It even peaked at 100 Gwei at one point during the day.
Polygon gas fees | Source: Polygonscan
Even so, Polygon is far cheaper than Ethereum. The reason behind this is the calculation of gas fees since Ethereum is calculated in ETH while Polygon is done in MATIC.
Thus, transferring 1 unit of the native currency, even at a low transaction cost of 7 Gwei on Ethereum, can go up to $0.62. On the other hand, 66 Gwei on Polygon will only cost $0.000358.
Along with this, the finality time on the networks also plays a crucial role in swaying an investor’s opinion. Polygon’s finality time enables the completion of a transaction in 2.3 seconds. On Ethereum, only six transactions can be completed in one minute.
This is why regardless of the lower base cost, Ethereum will not be able to beat Polygon’s fees despite the latter hiking it.
As an avid blockchain and cryptocurrency enthusiast with a deep understanding of the evolving landscape, I am well-versed in the intricacies of Ethereum, its decentralized finance (DeFi) capabilities, and the recent developments surrounding Layer-2 solutions. My expertise is grounded in a continuous immersion in the field, staying abreast of the latest trends, and actively participating in discussions and forums dedicated to blockchain technology.
The article highlights the phenomenal growth of Ethereum and its significant role in the blockchain space, particularly in the realm of decentralized finance. It discusses the challenges posed by the high costs of being an Ethereum user, leading to the emergence of Layer-2 chains and more cost-effective Layer-1 solutions.
Now, the central question posed is whether Ethereum's recent fee drop can alter the dynamics once again. This prompts a comparison with Polygon, a notable Layer-2 solution, and raises the possibility of Ethereum surpassing it in terms of cost-effectiveness.
The article delves into the recent drop in Ethereum fees, reaching their lowest levels in over two years, with the average transaction cost at 0.77 ETH, a level last witnessed in October 2020. This fee drop is substantiated by evidence from Santiment and the Ethereum gas fee tracking page.
On the contrary, the piece underscores the cost advantages of Polygon over Ethereum. Despite Ethereum's fee drop, the base fee for a transaction on the Ethereum chain still averages at 7 to 8 Gwei, whereas NFT and DEX transaction fees on Polygon range from $1.52 to $4 at the time of writing. Polygon's base fees are highlighted, ranging from 40 Gwei to 66 Gwei, with occasional peaks at 100 Gwei.
The crucial factor affecting cost differentials between Ethereum and Polygon is the calculation of gas fees. Ethereum's fees are denominated in ETH, while Polygon uses MATIC. The article provides a clear example, illustrating that even at a low transaction cost of 7 Gwei on Ethereum, transferring 1 unit of the native currency can cost up to $0.62, whereas 66 Gwei on Polygon translates to a mere $0.000358.
The discussion extends beyond costs to include the concept of finality time, emphasizing that Polygon's finality time enables the completion of a transaction in 2.3 seconds, while Ethereum lags behind with only six transactions per minute.
In conclusion, the article posits that, despite Ethereum's recent fee drop, it may not be able to surpass Polygon's cost-effectiveness due to factors like gas fee calculations and finality time, highlighting the complexity of the decision-making process for investors in the blockchain space.
FAQs
Polygon's finality time enables the completion of a transaction in 2.3 seconds. On Ethereum, only six transactions can be completed in one minute. This is why regardless of the lower base cost, Ethereum will not be able to beat Polygon's fees despite the latter hiking it.
Will Ethereum gas fees ever go down? ›
This is costly and makes up around 90% of the gas fees that rollups pay to post bundled transactions to the network. After Dencun, layer 2s will post the data to blobs, which are highly optimized and are much cheaper than calldata. “Overall, yes fees will reduce on Ethereum, but only for layer 2s,” Nolan said.
Is Polygon as safe as Ethereum? ›
Because of its side-chain status, Polygon is less secure in nature than Ethereum. It also lacks Ethereum's wide adaptability.
Why choose Polygon over Ethereum? ›
Polygon offers faster transaction speeds than the Ethereum network. It can achieve up to 7,000 transactions per second (TPS) on its mainnet, while Ethereum can only process around 15-25 tps.
Are Polygon fees lower than Ethereum? ›
Scalability: Polygon uses a network of side chains to offload transactions from the main Ethereum chain, allowing faster transaction speeds. Low transaction costs: Polygon boasts significantly lower transaction costs than Ethereum.
Will ETH 2.0 reduce gas fees? ›
Ethereum 2.0 is expected to significantly lower gas fees by increasing the network's capacity to handle transactions. The enhanced throughput and efficiency from sharding and other upgrades aim to reduce transaction fees to less than $0.001.
How do I avoid Ethereum gas fees? ›
7 Tips To Avoid Ethereum Gas Fees
- Optimize the transaction timing. ...
- Take advantage of rebate offers. ...
- Choose transaction type carefully. ...
- Monitor network congestion to avoid delays. ...
- Benefit from gas tokens. ...
- Calculate payable gas fees beforehand. ...
- Switch to Ethereum 2.0.
Soon after, projects started to be built on the Ethereum blockchain, and the crypto world had crypto assets like Polygon, which surpassed Ethereum and garnered the name of 'The Ethereum Killer' for providing use cases very much similar to that of Ethereum, only better and faster.
Which is better, Polygon or Solana? ›
Polygon is more suitable for users who want to access a wide range of dApps on Ethereum with low gas fees and fast transactions. Solana is more suitable for users who want to access a new generation of dApps with low gas fees and ultra-fast transactions.
Is Polygon a risky investment? ›
Polygon is one of the leading Layer 2 scaling solutions for Ethereum (ETH) that optimizes speed and reduces costs. MATIC, native token of Polygon, has experienced significant market volatility over time. Currently, Polygon is undervalued and there are upcoming catalysts that will surge its value.
Polygon and Ethereum are not in competition with each other. They rely on each other. The mission of Polygon is to use its network to create an infrastructure that can handle the mass adoption of Ethereum. Since Polygon is built on Ethereum's blockchain, it depends more on Ethereum than vice versa.
What happens when you bridge Ethereum to Polygon? ›
Polygon brings you a trustless two-way transaction channel between Polygon PoS and Ethereum by introducing the cross-chain bridge. The official bridge allows you to transfer tokens between Ethereum and Polygon PoS without incurring third-party risks and market liquidity limitations.
Is Matic better than Ethereum? ›
When it comes to transaction fees, MATIC is the clear winner. According to CoinGecko data, a typical Ethereum gas fee for a simple ERC-20 token transfer runs around $1.68. Compare that to Polygon's gas fee of $0.0026.
Are there Polygon gas fees? ›
Gas fees serve as transaction fees on the Ethereum, Base and Polygon blockchains, enabling the processing and validation of transactions. It is important to note that Magic Eden does not determine or charge these fees; they are an inherent aspect of the blockchain networks themselves.
Is Polygon more secure than Ethereum? ›
Yet while Polygon provides faster transaction processing, cheaper gas fees and greater liquidity for small trades, concerns around security remain, and it is not currently as robust in this space as Ethereum.
Does Polygon settle on Ethereum? ›
Polygon is a stack of protocols designed to fix Ethereum's scalability issues. The Polygon network addresses the network's challenges by handling transactions on a separate Ethereum-compatible blockchain. Polygon then returns transactions to the main Ethereum blockchain post-processing.
At what time are Ethereum gas fees lowest? ›
The best times to do Ethereum transactions are early in the morning, between 1:00 and 2:00 UTC, or late at night, between 9:00 and 11:00 UTC.
Does the ETH gas fee depend on the amount? ›
ETH gas fees are calculated based on the amount of computational resources (gas) required to execute a transaction or smart contract on the Ethereum network. The higher the gas limit and gas price set, the higher the fee.
How much will Dencun reduce gas fees? ›
For example, the median gas fees on Base have fallen from around $0.5 on March 13 (right before Dencun went live) to about $0.0012, according to the latest on-chain data aggregated by Marcov on Dune. Meanwhile, the average fees on Base stand at $0.06.
How to reduce Ethereum gas fees on trust wallet? ›
How to Change the ETH Gas Fee on Trust Wallet
- Create a transaction. Tap the send icon and select ETH. ...
- Access advanced settings. The next screen displays a summary of your transaction, including the estimated network fee. ...
- Change the fees. ...
- Save your settings.
