The revolutionary blockchain platform of Ethereum, well-known for being popular, not surprisingly, results in network congestion and quite high fees, simply described as gas fees (network transaction fees). Gas fees are the fees any user pays to execute a transaction or to interact with a smart contract on the Ethereum network. When the network is highly congested, gas fees can rise to astronomical heights, and colloquially speaking, a “gas war” ensues. This article examines the phenomenon of gas wars and provides actionable tactics to help you minimize transaction costs.
What Are Gas Wars and Why They Happen
A gas war is when many bidders are competing against each other to be included in the next block of transactions in case of huge network activity. Miners pick the transactions with higher gas fees, and the users keep outbidding themselves. This mostly happens in mainstream events like launching non-fungible tokens, decentralized finance protocol upgrades, or token airdrops.
The root causes behind gas wars include:
- It is Limited Block Space. Each block contains a gas limit, limiting the transactions it can accommodate.
- When some great event takes place, thousands of users attempt to interact with the blockchain simultaneously.
- Market speculation leads to a phenomenon called fear of missing out. Here, users want to secure their transactions in the least time possible and pay more for higher gas fees.
- Knowledge of these aspects helps you strategize your activity better on the Ethereum network.
Timing Your Transactions to Avoid Peak Hours
Everything is about timing when it comes to trying to reduce gas fees. The Ethereum network has different congestion levels throughout the day, depending on what is happening anywhere in the world and during high-demand events.
How to Time Your Transactions?
- Monitor Network Activity: Using resources such as Etherscan’s Gas Tracker `or EthGasStation will indicate low activity during some periods.
- Avoid Using Peak Hours: Weekdays between 8 and 2 in the morning will be pretty busy since Europe and North America are working at that time. Besides, the early weekend time is almost totally a quiet time by UTC time.
Gas Tokens: Do They Still Matter?
Gas tokens like GST2 and CHI were once popular for reducing transaction costs. These tokens exploited a mechanism in Ethereum’s gas refund policy, which allowed users to earn gas credits by deleting unused smart contract storage.
On the other hand, Ethereum London Upgrade, EIP-1559, which came into effect in August 2021, had pretty much made gas tokens largely anachronistic. That’s because this upgrade changed how gas fees get calculated altogether and no longer allows for refunds on cleared storage. Although gas tokens are not very practical anymore, knowing how they came about might enlighten one as to how Ethereum’s fee structure has evolved.
Alternative To Ethereum: A Brief Overview
When Ethereum gas costs continued to increase, various alternative options emerged for lower prices with faster times in transactions.
- Layer 2 Solutions: Platforms, including Arbitrum, Optimism, and zkSync, extend the functionality of Ethereum by processing transactions off-chain and then settling them on the mainnet. These solutions also reduce gas fees significantly without compromising security.
- Competing Blockchains: Networks such as Binance Smart Chain, Solana, and Avalanche have high throughputs and low fees. However, alternatives to Ethereum may require some sacrifice in decentralization.
- Ethereum 2.0: Someday in the future, this will scale the network, and fees will decrease.
Smart Contract Optimization for Lower Fees
Developers should write gas-efficient smart contracts. A poorly optimized code inflates gas fees, which then inflates for all the users who want to interact with the contract.
Optimizing Smart Contracts:
- Best Practices: Reduce data stored on-chain as operations related to storage are costly.
- Use Libraries: Libraries like OpenZeppelin keep a list of extremely optimized and safe contract templates.
- Do not perform redundant computations: Functions should be optimized so that the redundant computations are minimized.
- Contract auditing: It is a continuous process and helps identify inefficiencies and vulnerabilities that can cause gas prices to rise.
Well-designed contracts save gas consumption for developers as well as the end-users.
Tools to Track Real-Time Gas Prices
For the more budget-conscious Ethereum user, keeping up with the real-time price of gas is a must. There are a number of tools that can help you track and predict gas fees:
- Etherscan Gas Tracker: Current gas prices, historical data, and transaction fee estimates.
- Glasgow: Real-time gas fee data with visual charts for easy analysis.
- Blocknative: Advanced gas fee prediction tools and alerts.
- Dune Analytics Dashboards: Custom dashboards track gas usage trends and network congestion metrics.
Using these tools, you can make informed decisions and avoid overpaying for transactions.
Case Study: NFT Launches and Gas War Chaos
NFT launches are notorious for triggering gas wars. High demand for limited-edition NFTs often leads to exorbitant gas fees as users compete to secure their purchases.
For example, during the Bored Ape Yacht Club’s Otherdeed land sale, gas fees surged to thousands of dollars, frustrating users and causing network instability.
Lessons Learned from NFT Launches:
- Pre-allocate Funds: Make sure to have enough ETH in your wallet for any potential gas surges.
- Use Priority Gas Auctions: Some platforms will let you set a maximum gas price to ensure you don’t overspend.
- Leverage Whitelist Opportunities: Getting whitelisted often saves you from the frenzy that occurs during public sales.
By understanding how NFT launches work, you will be better equipped to handle future launches.
Conclusion
Although gas wars are somewhat a given for today’s Ethereum ecosystem, the right strategies will reduce the dent they put in your wallet. Among such strategies are the timing of transactions, finding alternative solutions, smart contracts optimization in regard to efficiency, the use of real-time tracking tools, and many more. Hopefully, as Ethereum matures with scalability solutions, gas wars will be just a memory.
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