Trading NFTs can be lucrative, but that doesn't mean it's free. You'll have to pay a "gas fee" to buy or sell these digital assets. These fees are higher on some blockchains than others, and, in many cases, they change throughout the day. In the past, popular chains like Ethereum had gas fees that averaged over $40 per transaction. In this article, we'll dive into the most frequently asked questions about NFT gas fees.
Why does an NFT need gas?
Distributed ledger transactions, including NFT transactions, must be validated before they're included on the blockchain. You'll pay a transaction fee each time you transact. Proof-of-work blockchains use these fees to compensate miners, and proof-of-stake blockchains use them to compensate those staking their tokens.
Why are gas fees so high, and how do you calculate NFT gas fees?
Gas prices, and thus gas fees, fluctuate in response to supply and demand. These fees are generally higher during peak transaction times, as there are more transactions to validate. There's a limit to how many transactions can be validated each second, regardless of which ledger you're using. On many chains, validators must prioritize which transactions will be added to the blockchain first. In most cases, the transactions with the highest fees are validated before those with lower fees.
Wallets like MetaMask let you choose the speed at which you want the transaction to be completed. You can pay less if you don't mind a slow validation process, or you can pay a priority fee if you want it to be validated quickly.
Gas costs also relate to the blockchain you use. Proof-of-work blockchains typically have higher gas fees since mining requires more computing power and electricity than staking. Often, when you hear someone talking about gas fees, they're referring to the Ethereum blockchain. This is because the Ethereum network has had extraordinarily high gas fees in the past.
Ethereum's gas price is broken down into gwei, the smallest unit of a single Ether. The cost is calculated by adding the base fee to the priority fee and multiplying that by the gas limit.
What is a gas fee limit?
The gas limit is the maximum amount of gwei you agree to pay for the transaction. You can set your gas limit to whatever amount you'd like, but there are risks associated with setting it low.
During peak transaction times, many users set their NFT gas fee limits high to ensure their transactions are validated. Those who set their limit too low run the risk of their transaction failing, in which case they'd lose the gwei used for the fee without their transaction completing. On the other hand, if your gas limit exceeds what is needed, you'll receive a refund for the excess gwei.
Are gas fees different on each blockchain?
Each blockchain has its own method of calculating gas fees, and you can expect to pay more on congested networks and those using a proof-of-work protocol. For example, Hedera's gas fees are calculated by adding the intrinsic gas, EVM operation gas, and Hedera service gas. These fees are predictable and can be calculated ahead of time using Hedera's fee calculator.
Proof-of-stake protocols generally result in lower gas fees, but this isn't always the case. As many outlets have reported, Ethereum's gas fees didn't decrease when the network switched from PoW to PoS. The switch, however, did set the foundation for future fee decreases. The Ethereum Network's fees are significantly lower now than their historical average, but this is primarily due to less congestion.
What is lazy minting, and how does it affect gas fees?
Lazy minting removes upfront costs associated with minting an NFT. Because no fees are paid until a creation sells, this helps NFT artists who don't know how much their work might fetch. NFT marketplaces use this technique to create a voucher containing an NFT's token ID and URI rather than actually minting the NFT to the blockchain at the time of creation. When someone buys the NFT, a contract call mints the NFT to the blockchain. Gas fees are paid at the time of purchase.
How can you avoid high gas fees?
Transact when network demand is low
Prices fluctuate in response to network demand, meaning you can reduce fees by transacting when network demand is low. Gas fees are generally cheaper on weekends and when most people are asleep in the United States. Conversely, they are higher during working hours and on weekdays.
You can use the Ethereum Gas Charts Tool to find the times when gas price averages are at their lowest.
Set your own gas limit
Setting a lower gas limit when transacting is one of the most straightforward ways to avoid high gas fees. It can help to look at the current or weekly gas price averages to estimate a reasonable limit. It's important to remember you can lose funds if you set your gas limit too low and the transaction fails.
Edit your transaction priority
Most crypto wallets allow you to choose the transaction priority. The transaction's priority will dictate how desirable it is for miners to include it in the next block. Wallets like MetaMask make a priority recommendation. If you're all right with a slower transaction, you can save money on fees by manually selecting the lowest priority.
Hedera and NFT gas fees
Hedera is committed to low, predictable fees across the board. The cost of NFT gas on Hedera depends on the type of network services used and the network resources consumed to validate the transaction.
Hedera users send their transactions to a single Hedera node, which then submits the transaction to the network. The node expends a small amount of energy when submitting the action to the network. The fees are used to incentivize and compensate nodes for supporting the network.
Because Hedera's transaction validation requires fewer resources than mostDLTs, the fees are comparatively low. Hedera's fees are set in USD, so you never have to worry about tricky conversions. Additionally, if you send more HBAR in the transaction fee operation than is required, you'll never be overcharged, and the excess funds will remain in your wallet.
