Ethereum’s Gas Prices Are Just Too High
Here’s How to Avoid Them
When Ethereum was designed, it was lauded as some kind of “global cloud computer” that would revolutionize how digital entities interact with each other. When it launched, there was plenty of room on the network for transactions (computing operations), and it seemed impossible that it would so quickly turn into the expensive, overcrowded party that it is today. The price of Ethereum’s network token, Ether, has steadily appreciated in value, while the “gas” amount, the total number of computing units available in each block, has become a scarce resource. Just like the gas and diesel prices in many places at the moment, Ethereum’s “gas” prices have become too expensive to be practical.
As the most actively used blockchain protocol, and thanks to the ever increasing number of projects in areas such as DeFi, Ethereum is in a state now where it feels like the whole world is trying to squeeze their computing operations into an increasingly problematic bottleneck. There is just enough room on the network for about 20 transactions per second, but the demand is many orders of magnitude higher. This bogs the network down and makes single transactions prohibitively expensive. The cloud computer of the future, and standard bearer for blockchain technology is practically unusable for many.
Reasons to Stick with Ethereum
Before we discuss alternatives, however, it’s worth noting that Ethereum’s popularity as the industry standard means that they will eventually find a cure for this chronic throughput problem, in which case it might be wise for projects needing the ubiquity and access Ethereum provides to not stray too far from the platform’s protocols. There are already a variety of projects being developed to improve throughput and/or lower transaction costs. One promising method is called “sharding,” a way to make the processing of transactions run in parallel.
Another benefit of using Ethereum is that the community is huge, and blockchain projects need strong support to maintain the protocols, tools, etc. Just recently, a critical bug was found and fixed thanks to this community. Blockchain and cryptocurrencies are ultimately social enterprises, so in general the more people that work on a project, the better. All these upgrades and maintenance efforts come for free on Ethereum. This is a huge benefit when compared to other commercial blockchains where you have to pay for this service, or private ones where you have to do it yourself.
Picking the right blockchain for your needs
As you know, the high transaction costs and slow speed on the Ethereum blockchain are prohibitive, and have even killed off some projects that launched back in the days when transaction costs were a negligible fraction of what they are today. And while it’s true that there have been a few times when transactions where even higher than they are today (June, 2021), for some businesses doing thousands of transactions each day, even a $1 transaction fee is just too expensive, especially when you think about applications like micro-transactions. With this in mind, it’s not too surprising that projects are now flocking to alternative chains and, as of today, there are plenty available to choose from that accomplish more or less the same things.
Much like choosing a car, or any other piece of technology for that matter, picking the right blockchain is always about finding the best balance of features and limitations. Each project is going to have specific needs that will make certain blockchains a better fit. We’ve written at length about these in several articles, but the most common considerations are always privacy, transaction throughput (speed), transaction cost, safety, security, etc. Different chains prioritize different features.
One way to improve throughput is to not share your computing operations with the rest of the world. In that case, you would use a network reserved for a smaller audience, or even run a private chain. When it comes to private chains there are also many possibilities, such as going with a closed network deployment like Hyperledger. However, private blockchains have their own issues, and in most cases projects that could benefit from a private chain could just as well use a database
The ideal solution would be to somehow retain the strong community and stability of Ethereum while at the same time not having to pay the enormous gas fees or deal with the bottlenecks. And it just so happens that such a network does exist!
Enter SparkNet
It turns out you actually can have your cake and eat it too by simply copying the Ethereum protocol and launching a separate chain. This allows you to continue using all the existing popular tools and benefit from all the upgrades and patches for free. From the aspect of security this only makes sense if your chain uses a different consensus algorithm than the energy consuming proof-of-work one (PoW) that’s causing all the environmental backlash to a number of blockchains at the moment on the Ethereum mainnet.
SparkNet was created specifically for the purposes of supplying blockchain projects that run CoreLedger TEOS, our Token Economy Operating System, with the necessary blockchain backbone. It’s purpose built to handle real-world use cases like games, connected devices like smart locks, documentation, and much more. SparkNet uses the efficient proof-of-authority (PoA) consensus mechanism. A PoA network (unless hidden behind a VPN) can be publicly read and transacted on, but only privately validated. Unlike miners on other networks, a PoA mechanism relies on a few trusted sealers, or validators, who are given certain privileges on the network. They are trusted to do the right thing and not to cheat, hence the term “authority.” If someone on the network wants to become a sealer, they must apply for those privileges.
A public proof-of-authority network like SparkNet is the next best thing to running on Ethereum or migrating to a different network. It allows you to transact with zero gas costs (that means transactions are free!), but still restricts the distribution of gas tokens to the legitimate participants in the system. In the case of SparkNet, these legitimate participants are the authorized users of TEOS based applications. So, SparkNet solves both of Ethereum’s biggest issues, while maintaining its core protocols. This means that if, one day, Ethereum solves its cost and bottleneck issues, projects could migrate back to the Ethereum mainnet. This “blockchain agnosticism” is a key design feature of all CoreLedger’s products.
SparkNet is also the ideal network for users of our Active Sandbox, which was designed specifically for companies to develop and test blockchain solutions in a real blockchain environment. Obviously, this would be prohibitively expensive if run on the Ethereum mainnet, and since it would be on a live public blockchain there is less possibility to try things out, and make mistakes, without creating a permanent record. SparkNet, however, can be used “unproductively,” which means that you can experiment to your hearts content, without adding records to a public chain.
If high transaction costs and low speed have been causing your project headaches or preventing you from using blockchain technology, then get in touch and let’s talk about using SparkNet to solve your blockchain problems.
At CoreLedger, we believe that blockchain is a practical technical solution to improve and solve a wide variety of issues across industries and sectors, which is why we try to cut through the hype and focus on real world applications, not just what’s technically possible.
CoreLedger’s mission is to help businesses of all sizes quickly and affordably access the benefits of blockchain technology. From issuing a simple token, to enterprise- grade token economy solutions, we have all the tools you need to quickly and affordably integrate blockchain into your business.
Interested in our results-focused, real-world approach? Then visit our website for more information, or get in touch with us directly to discuss your project.
