Ethereum Gas Fee Too High? 6 Ways to Save Gas Fee

By William M. Peaster

Ethereum’s gas prices have been on the rise as demand for Ethereum hits new highs. Paying so many Gwei per day can reduce your earnings, which can be a headache for any crypto user actively using the Ethereum network.

This article will explore some strategies you can take to lower and reduce your gas fees.

Ethereum Gas 101 ⛽

Gas is a fundamental component of Ethereum. Simply put, it is the amount of ETH that users need to pay to perform activities on the Ethereum network. On a more technical level, Gas is a unit of measurement used to track the computational cost of performing specific operations on Ethereum, including sending ETH, trading DeFi tokens, minting NFTs, or deploying smart contracts. You may ask: Why do I have to pay Gas fees? In fact, Gas fees play an important role in helping Ethereum run efficiently, as Gas fees prevent spam transactions and are paid as rewards to miners who protect the Ethereum network (with the merger of Eth2, miners will soon be replaced by ETH stakers). Gas is how you get decentralized computation on Ethereum, and it is also part of what makes this computation possible. Gas is denominated in Gwei, 1 Gwei = 0.000000001 ETH (with 8 zeros after the decimal point).

If you hear someone say “Gas is 50 now”, what they mean is that if you want to successfully complete a transaction on Ethereum right now, the expected Gas price is 50 Gwei (that is, the price of 1 unit of Gas is 50 Gwei, which is 0.00000005 ETH).

Image source: ETH Gas Station

But this doesn’t mean you can simply multiply 50 by 0.000000001 ETH to calculate the Gas fee you’ll pay. This is where Ethereum’s Gas Limit comes into play. At the time of writing, Ethereum’s Gas Limit is 15 million Gas, which is the upper limit of how much Gas can be used in a single Ethereum block (that is, the Gas amount of all transactions included in a single Ethereum block cannot add up to more than 15 million). There is also a Gas Limit for different types of single transactions, such as a basic ETH transfer The Gas Limit is 21,000 Gas (of course, other more complex operations require more Gas). Therefore, to calculate the Gas fee to be paid for a particular Ethereum operation, we just need to multiply the Gas Limit of the transaction by the current price per Gas. For example, if the current Gas price per unit is 50 Gwei, and the Gas Limit of a simple ETH transfer is 21,000 Gas, then the Gas fee of this transaction = 21,000 * 50 * 0.000000001 ETH = 0.00105 ETH.

Why is gas so expensive recently? ?️

We have to pay ETH (Gas fee) to use Ethereum's block space. With the rise of DeFi and NFTs, Ethereum's block space has become more and more valuable because the demand for block space has surged recently. As a result, Gas prices have soared to crazy levels.

Above: As of May 18, the transaction fees of major blockchain networks in the past 24 hours (second column) and the average daily transaction fees in the past 7 days (third column). The daily transaction fees of the Ethereum network are among the highest.

This is because the price of gas is determined by the demand for block space, which is the result of an auction-like process in which users "bid" (i.e. set a gas fee) based on their willingness, and then miners sort and pack transactions into blocks based on the users' bids. Therefore, paying a higher gas fee gives you a greater chance of having your transaction processed quickly, so during periods of high volume of users trying to acquire Ethereum block space, the price of gas will rise as people raise the "bid" they are willing to pay (to get their transactions processed as quickly as possible). Ethereum blocks are now always full! This is a result of the growing demand for block space.

How to save gas fees on Ethereum?

Using Ethereum and trying out Dapps (decentralized applications) on top of Ethereum’s application layer is perhaps the most productive thing you can do right now. However, with Ethereum in such high demand lately, Gas fees are expensive and many people are scared off by the high prices. So what’s the good news? Ethereum is currently building and transitioning to scaling solutions, so expensive Gas prices are not an indefinite concern. But while Ethereum is still in its current transition period, high Gas fees are a priority. In addition, there are now a range of strategies and techniques that can greatly reduce your Gas expenses. With a little research and work, you can quickly learn to pay Gas wisely and no longer spend too much ETH when you want to use the Ethereum network. Let’s take a look at the best ways to save Gas fees currently!

6 ways to save gas fees on Ethereum

1. Optimize your trading time

Ethereum’s Gas price can fluctuate wildly during the day, depending on what’s happening on the Ethereum chain and what times people in different parts of the world are awake and active.

Above: The intraday fluctuations of Ethereum Gas prices from May 17 to 23. It can be seen that Ethereum Gas prices fluctuate greatly during the day. Source: ethereumprice.org

Therefore, there are certain times when Gas prices are generally lower on average. If you take inventory of these times and use them as trading times, that would be a great start to lowering Gas fees. So, when is the best time to trade? Generally speaking, Gas prices are higher on weekdays and lower on Saturdays and Sundays, so an easy way to do this is to start batching your trades on the weekends. As for the actual intraday times, a recent report from Paxful concluded:

The busiest time (for the Ethereum network), and therefore the most expensive time (for gas fees), is from 8am to 1pm (EST). This is not surprising, as Europeans and Americans are fully awake and working during this time. In contrast, the least busy time (for the Ethereum network) is from midnight to 4am (EST) - this is when Americans are sleeping, Europeans are just starting their workday, and Asians are finishing their workday.

So there you have it - by trading during these time windows (when the Ethereum network is not busy) during the day, there is a good chance that your gas fees will be lower than at other times!

2. Trading using Ethereum scaling solutions

It’s still early days for Ethereum’s scaling solutions ecosystem, but some of the projects that have already gone live are impressive and are getting better every day. You can enjoy instant and super cheap Ethereum transactions using these solutions! In this space there are Layer2 solutions, like projects based on Optimistic Rollups or ZK-Rollups, which provide their own super efficient infrastructure while inheriting all of Ethereum’s security guarantees. Then there are sidechains, like Polygon’s PoS chain or xDAI, which are actually separate efficient blockchains, but specifically connect to and cater to the Ethereum network. In these Ethereum scaling solutions, you may only occasionally interact with the Ethereum mainchain, but instead handle most of your crypto activity in L2s networks or cross-chain environments at affordable fees. Therefore, now is a time to familiarize yourself with these scaling solutions, while these things are still in their early stages. Last month, I wrote an article about 7 Things You Can Do on Layer 2. This article is definitely a good place to start if you want to dig deeper. The activities covered in this article include:

• Lending and borrowing on Aave through Polygon;

• Trade perpetual contracts on dYdX via StarkEx;

• Trade DeFi tokens on DeversiFi via StarkEx;

• Earn SNX staking rewards through the Optimism network;

• Liquidity mining on Loopring via ZK-Rollups;

• Donate on GitCoin via zkSync.

(Note: Polygon, StarkEx, Optimism, ZK-rollups and zkSync mentioned above are all Ethereum expansion solutions)

3. Using Gas Tokens

In short, you can mint Gas tokens when Gas prices are low, and then redeem them when Gas prices are high, at which point you get a refund in ETH to help you compensate for your Gas costs. Gas tokens work because of Ethereum's storage refund mechanism, which refunds Ethereum users who delete storage variables. This encourages people to not bloat the state of Ethereum. (Note: In order to encourage users to store data on the blockchain more efficiently, Ethereum provides a refund when you remove data from the blockchain)

So with gas tokens, you can take a snapshot of Ethereum’s state when gas prices are low, then unlock that state when gas prices are high for a refund in ETH. Voila! That enables cheaper transactions. But gas tokens actually clog up Ethereum’s state size and lead to inefficient gas pricing, so they seem to be phased out in the next few years, which is something you need to keep in mind. In the meantime, they can lower your gas fees, so don’t be put off by them just yet! For example, a popular gas token project is GasToken.io. The project has two slightly different gas token implementations, GST1 and GST2, but they work similarly. To use any of these tokens, you simply navigate to their “Contract” page on EtherScan and call the “Mint” and “Free” functions. When you free these tokens, you will get a refund in ETH that can be used to compensate for your gas fees!

4. Use Dapps that minimize gas fees

Some Dapps (decentralized applications) on Ethereum explicitly offer products that minimize gas. For example, Yearn's V2 vaults and KeeperDAO automatically batch users' transactions so that users don't have to pay gas fees manually one by one, but can pay gas fees together, which greatly reduces the gas fees paid by each user. Another project to consider using is the Balancer V2 trading protocol. The Balancer V2 version makes Balancer now a single large vault, which will save and manage assets in all different Balancer liquidity pools, making gas fees for transactions through Balancer even cheaper now! Using these Dapps that significantly minimize gas fees is one of the easiest ways to save gas fees. You just need to know which applications are the most gas-saving!

5. Develop trading strategies with DeFi Saver

Can you test and simulate transactions without actually executing them, so that you can understand and adjust how much Gas you’re going to pay before you pay for it? Well, you can with DeFi Saver’s new Recipe Creator and its Simulation Mode! For more information, see:

https://medium.com/defi-saver/introducing-the-defi-saver-recipe-creator-34d4c26630c

Here’s how the process works. You can use Recipe Creator to arrange any type of Ethereum activity you want, then run Simulation Mode to test those activities without paying any gas fees. This system isn’t a direct way to save gas, but it is a way to tweak transactions to help keep gas fees down.

Image source: DeFi Saver

6. Use apps that partially refund gas fees

Projects on Ethereum know that their users are suffering from high gas fees right now. As a result, some Ethereum projects are refunding some of the gas fees to their users to make up for this pain. Two of these projects are Balancer and Furucombo. Earlier this year, Balancer launched a program where users who trade through Balancer will receive BAL (the project's governance token) as a way to refund some of their gas fees for certain trading pairs. This means that if you want to trade in DeFi, you can consider doing it through Balancer because you can get a nice BAL token just by trading with this protocol.

There is also the DeFi aggregator project Furucombo, which is currently running a Gas compensation plan to reward COMBO tokens to users who use the protocol. For details, see:

https://medium.com/furucombo/combo-mining-season-3-5e5f248923b2

While these are brand new initiatives, each has been successful so far for the respective protocols, and it would not be surprising if more protocols adopt similar initiatives in the future!

Summarize

High Gas prices are not a permanent problem. With the arrival of Layer 2 scaling solutions and Eth2, Gas prices will drop significantly in the coming year. However, we do have to deal with high Gas prices at the moment. So next time you have to make an Ethereum transaction, don’t do it blindly. Check what time it is, or if you can make the same transaction with a certain scaling solution, etc. By increasing your knowledge of how Gas is used, you can save a lot of ETH now!