Ethereum Congestion: ETH Gas Fee Reduction Strategies

Ethereum, one of the leading blockchain platforms, has garnered immense popularity over the years, thanks to its smart contract capabilities and a multitude of decentralized applications (DApps) built on its network. However, with great success comes a unique set of challenges, and one of the most significant challenges faced by Ethereum users is network congestion and the increase of the ETH gas fee.

What is an Ethereum Network Congestion?

Ethereum congestion occurs when the demand for processing transactions on the network surpasses its capacity. In simpler terms, it’s like a traffic jam on the blockchain, where transactions pile up, causing delays and increasing the ETH gas fee. This congestion is primarily a consequence of Ethereum’s Proof of Work (PoW) consensus mechanism, which relies on miners to validate transactions and add them to the blockchain.

Understanding ETH Gas Fees

ETH gas fees are the lifeblood of Ethereum transactions. They determine how fast your transaction gets processed and how much it costs. Understanding gas fees is essential for anyone engaging with Ethereum, as they directly impact the execution of transactions and smart contracts.

Defining “Gas”

In Ethereum, every operation performed by a smart contract or transaction requires computational work which includes executing code, storing data, and processing complex calculations. Each of these operations consumes a specific amount of computational resources, which are measured in “gas.”

ETH Gas Fee

Every operation has a predefined gas cost, and more complex operations require more gas to complete. For example, a simple transfer of Ethereum from one wallet to another consumes less gas than executing a complex smart contract. It is denominated in Ether (ETH) and represents the cost per unit of gas. Users can set the gas price they are willing to pay for a transaction. Miners, who validate and add transactions to the blockchain, are incentivized to prioritize transactions with higher gas prices because they earn these fees as rewards.

Total ETH Gas Fee

To calculate the total cost of a transaction, you multiply the gas used by the gas price. So, if a transaction consumes 200,000 gas and the ETH gas fee is 0.00002 ETH/gas, the total cost of the transaction would be 4 ETH(200,000 gas x 0.00002 ETH/gas).

Gas Limit

This represents the maximum amount of gas users are willing to consume for a transaction. It’s a safety measure to prevent runaway code or accidental overspending. If the actual gas used exceeds the gas limit, the transaction fails, but the gas fee is still paid to miners.

Dynamic ETH Gas Fee

Gas prices are not fixed and can vary based on network demand. During periods of high congestion, gas prices tend to rise as users compete to have their transactions processed quickly. Conversely, in less congested periods, gas prices are lower.

EIP-1559 and BASEFEE

Ethereum Improvement Proposal (EIP)-1559 introduced a major change to gas fees. It introduced the concept of a “base fee” that is automatically adjusted based on network demand. Users now include a “tip” with their transactions to incentivize miners. This system aims to make gas fees more predictable and reduce congestion.

Strategies for Reducing ETH Gas Fees

1. Choose Off-Peak Times: Execute transactions during low-traffic hours to benefit from lower gas fees, typically during late-night or early-morning hours (UTC).
2. Opt for Layer 2 Solutions: Explore Layer 2 scaling solutions like Optimism, Arbitrum, or zk-Rollups. These solutions operate on top of the Ethereum mainnet and can offer faster and cheaper transactions.
3. Use Efficient Contracts: When creating or interacting with smart contracts, ensure they are well-optimized for gas efficiency. Use libraries and design patterns that minimize gas consumption.
4. Batch Transactions: Combine multiple transactions into a single batch if your wallet or dApp supports this feature. This reduces the overall gas cost since you’re paying for a single transaction to process multiple operations.
5. Adjust Gas Prices

Stay updated on current gas prices through reliable sources or Ethereum gas price estimation tools. Adjust your gas price to match the network’s conditions. Avoid setting gas prices too high, as you may overpay during periods of low congestion.

6. Set a Realistic Gas Limit

Carefully choose the gas limit for your transactions. While it’s important to avoid setting it too low (which could result in a transaction failure), setting it too high wastes gas. Experiment and find an optimal balance.

7. Use Gas Tokens

Consider using gas tokens like CHI or GST2 to prepay for gas at lower prices during non-congested times. These tokens can be consumed later when gas prices are high, saving you money.

8. Explore Fee Estimation Tools

Utilize Ethereum gas fee estimation tools available in wallets or online to get real-time recommendations for gas prices based on network conditions.

9. Avoid Frequent Microtransactions

If possible, consolidate smaller transactions into fewer, larger transactions. Frequent microtransactions can accumulate higher fees over time.

10. Participate in Governance Proposals

Stay engaged with Ethereum’s governance and consider supporting proposals aimed at improving gas fee structures and scalability, such as EIP-1559 and Ethereum 2.0 upgrades.

11. Explore Alternative Networks

Consider using Ethereum-compatible networks like Binance Smart Chain (BSC) or Polygon (formerly Matic) for lower-cost transactions, especially for non-critical operations.

12. Plan Ahead

If your transaction isn’t time-sensitive, wait for periods of lower network congestion to execute it. Planning ahead can result in significant cost savings.

Challenges of Pending ETH Gas Fee

1. Pending transactions often occur when the network’s capacity is stretched to its limit during high demand.
2. Users who want to quicken their transactions often raise the ETH gas fee they’re willing to pay. This can drive up the ETH gas fees and leave some users with pending transactions if they can’t or won’t pay higher fees.
3. Sometimes, older transactions remain pending while newer ones get processed. This can lead to unpredictable delays, especially when the network experiences sudden spikes in activity.

Solutions of Pending ETH Gas Fee

1. If your transaction is stuck in the pending state, you can try increasing the gas price associated with it. A higher ETH gas fee incentivizes miners to prioritize your transactions over others.
2. Some Ethereum wallets allow users to cancel pending transactions. If your wallet supports this feature, you can cancel the pending transaction and then resubmit it with a higher gas price to expedite processing.
3. Gas price estimation tools provide real-time information on ETH gas fees and transaction confirmation times. These tools help you set an appropriate gas price to avoid overpaying while ensuring timely processing.
4. Use RBF to replace a pending transaction with a new one that has a higher gas fee to quicken your transaction.
5. Some Ethereum wallets and services provide options to clear stuck or failed transactions from your account, allowing you to start over with a fresh transaction.
6. Wait for the network congestion to subside, and gas prices to decrease during off-peak hours.
7. Consider using alternative blockchain networks, like Binance Smart Chain (BSC) or Polygon (formerly Matic), which often have lower fees and faster confirmation times. You can bridge assets between Ethereum and these networks to enjoy more cost-effective transactions.
8. Layer 2 scaling solutions, such as Optimism and Arbitrum, aim to reduce congestion on the Ethereum mainnet.
9. Stay informed on Ethereum news and updates, as network improvements and changes in fee dynamics can impact transaction processing times and costs.

Endnote

Ethereum started working on Proof-of-Stake back in 2020, and they’ve been gradually testing it alongside the main network. They’ve made good progress, but there are still some important things to do before the big switch. Right now, they’re thinking it might happen in the first or second quarter of 2023, but that could change. The Ethereum developers are taking their time to make sure everything goes smoothly and is safe.

FAQs

1. What is the current ETH fee?

The transactional cost of Ethereum is at 0.0004 (on 5th September 2023), which is slightly higher than the 0.0003 it was a year ago.

2. What is the ETH withdrawal fee?

Ethereum costs 0.01 ETH for each withdrawal.

3. How is the gas fee calculated?

ETH gas fee depends on how much computer power is used and the price for each unit of power.