How to reduce gas fees in the Ethereum network?

Ethereum is a rather expensive network and the high cost of transactions is due to its popularity and the price of ETH. The network load and the complexity of the operations directly affect the cost of the transaction fee. Ethereum commissions are calculated based on the gas limit for a specific operation and the cost of gas at the time given.

Yet there are several ways to reduce your gas expenses:

1. The lower the network congestion, the lower the cost of transactions. Choose a time when the network is used by as few people as possible. You can track the load through services such as EthereumPrice. According to this service, during the first half of Monday is when the fewest transactions are made.
2. Some wallets allow you to manually adjust the size of the commission on the network. These include the most popular wallets like Metamask and MyEtherWallet. Be careful: if your price is below the recommended minimum, the transaction may not go through at all.
3. Services such as Tenderly and DeFI Saver will help you estimate the cost of a transaction. Use them to calculate your costs before real transfers.
4. Ethereum is not the only network on which you can make transactions; there are cheaper networks such as Binance and other EVM blockchains. In addition, you can use independent networks like Solana, Cardano, or Near.
5. Wholesale is cheaper! There are applications that pool user transactions and share the commission between them. It’s like carsharing but in the blockchain. Balancer is the most popular of them.

Layer2 and Sidechains

Another way to save money is to use Layer2 networks. They make a noticeable difference in sending transactions and processing operations.

Layer2 networks for Ethereum operate on the basis of transaction pooling technology outside the main Ethereum network. This is based on the Rollups technology which is when transactions are combined into large groups and only then are confirmed at the “base” level; on the Ethereum blockchain itself.

Other popular Layer2 projects are Arbitrum, Optimism, LoopRing, ZKSync, Boba Network, and Aztec Network.

Sidechains in Ethereum use an independent security system and consensus algorithms. They are essentially independent networks aside from Ethereum. Like Layer2 solutions, sidechains aim to increase the speed of transactions and reduce their cost for the crypto assets of the “parent” network. The most popular side chains in Ethereum are Matic (Polygon PoS), Gnosis, or Loom.

Gas prices & The Merge

On September 15, a large-scale action called “The Merge” was activated on the main Ethereum network. The blockchain was successfully transferred to the Proof-of-Stake (PoS) consensus algorithm. Has this affected the cost of transactions within the network?

No.

The mechanisms for calculating transactions during the transition to the new algorithm remained. However, the time of the transactions themselves was reduced, which can unload the network, and therefore reduce the cost of sending.

The update — which should change the calculation of transactions — will take place in the second half of 2023 as part of the Shanghai hard fork.