Why ETH gas fees are insane: How to Avoid High Gas Fees?

The ridiculous increase in Ethereum gas fees is a result of the transaction load on the network, which is probably spurred by the rapid-growing amount of trades and activities on the DeFi and NFT market. Let's explore more in this article - Why ETH gas fees Are insane: How to Avoid High Gas Fees?

Why ETH gas fees are insane

There are a few things that may be in play if high gas prices are causing you transaction anxiety, such as:

- A surge in activity on the network

-You could be executing a complicated transaction

- There is a sustained period of interest in the network

The market for gas fees will soar if a surge of customers tries to complete transactions at once. These spikes usually occur around popular DeFi or NFT events.

This was the case when Yuga Labs, the company that created the Bored Ape Yacht Club, carried out their renowned Otherside launch. The launch was the first time that Otherdeed NFTs, or deeds to virtual property inside their Otherside metaverse, were made available for purchase. Users competed to mint an Otherdeed before everyone else in order to be one of the select few before they were all gone, which caused gas prices to soar due to the high demand for these NFTs.

As people rushed to purchase NFTs during the event, average gas prices rose to the 6,000 gwei area. Many users of the Ethereum network also experienced failed transactions as the mempool was flooded with activity.

You Could Be Executing a Complicated Transaction

Each transaction may demand a different amount of gas. A peer-to-peer transaction involving ETH typically uses a little amount of processing power, which results in a small amount of gas being used. No more than 21,000 units of gas are needed for a typical peer-to-peer ETH transfer.

However, more complex smart contract transactions, like making a swap on Uniswap, call for more processing power and gas. Depending on the smart contract functionalities used, complex transactions could take hundreds of thousands of units of gas, if not more. expect to pay more gas fees when engaging with a smart contract than if you were just sending ETH from one address to another.

This is important to keep in mind because, for some users on the Ethereum network, these gas fees can wipe out potential profits. Take, for example, a deposit in a smart contract that pays 10% APY on USDC. While this may seem like an attractive way to make a high interest for the average user, they may not understand that there will be both deposit and withdrawal fees when interacting with the smart contract.

If they deposit $100 of USDC, they are expecting $10 of profit at the end of the year. But what they may not factor in are ETH gas fees, which will most likely be higher than the $10 of interest received.

A Sustained Period of Interest in the Network

When there is sustained interest in the Ethereum network, this has historically led to higher gas prices, as well. As more people use the network and start conducting more and more complicated transactions, the demand for block space increases resulting in longer periods of higher network fees.

For instance, when interest in Ethereum began to climb as a result of DeFi Summer in 2020 up to the bear market of 2022, there was generally more interest in network activities than ever before. This correlated with overall higher gas prices when compared to the period before. While gas fees now seem “cheap” compared to the heights reached during 2021's bull run, they are still in aggregate significantly more expensive than they were during the 2018/2019 bear market.

How to Avoid High Gas Fees

There are a few things you can do to minimize the amount of ETH gas fees you have to pay, including:

- Setting a lower base fee in your wallet (can result in slow, stuck, or dropped transactions)

-Wait for periods of low activity

-Use Layer-2s

- Use gas fee tracking tools

Lower Your Gas Fees

Transaction fees can typically be set by users of Web3 wallets like MetaMask. Users can set the basic charge for their transaction to a lesser value at times when base fees are high, however, this is not advised. Your transaction will be sent to the mempool in this way, where it might or might not be picked up by miners (soon-to-be validators) if and when base fees decrease. You won't be able to use the account until the affected transaction is canceled or replaced, which may cause transactions to be slow, stuck, or even dropped.

It is advised against submitting a transaction with a base fee that is below the market until base fees drop below your specified threshold.

Wait for Periods of Low Activity

If you can, try waiting for your transaction until there is less activity on the network. By doing this, you won't have to compete with as many users for block space, and if you price your transaction right, your transaction will probably be processed more quickly.

Use Layer-2 Solutions

Separate blockchains used for layer-2 solutions run on top of the Ethereum network. By utilizing rollups or network sidechains, they make use of the security and decentralization of Ethereum's blockchain while having (in general) significantly lower gas fees. Common Layer-2 scaling techniques include Polygon, Optimism, and Arbitrum. For accurate MATIC gas prices, charts, and heat maps, Polygon users can use Blocknative's Polygon gas estimator.