How to save gas on ethereum transfer (and save money in ETH transactions ) in 2022 » Destpump

Fuel comes in different forms—it could be the cup of coffee we drink before we start our day, the morning workout to release dopamine and endorphins, or… well, the gas that makes a car go vroom. And just like how humans and cars need their fuel, so does the Ethereum (ETH) blockchain. For this particular digital asset, its energy source is called Ethereum Gas

What is Ethereum gas? 

Ethereum gas is essentially the costs or fees for making transactions on the Ethereum blockchain. The tricky part, however, is that Ethereum gas prices aren’t fixed. The amount of gas required for each transaction depends on how complex the exchange is. 

For example, a simple transfer could cost you 21,000 gas (the minimum requirement for every transaction). On the other hand, a more complicated one, such as the ones used in decentralized finance (DeFi), could set you back 1,000,000 gas. 

Each unit of gas has a price denoted in gigawei (gwei) or nanoeth. A gwei equals 1,000,000,000 wei, which is the smallest Ether unit base. To give you a better idea of the conversion to Ethereum, one wei is equal to 0.000000001 ETH

Think of it as Ethereum’s version of satoshis. Let’s say that the price of gwei is 5. In that case, a 21,000 gas transaction would cost 21,000×5 = 105,000 gwei (0.000105 ETH). No

Essentially, gas is used by the Ethereum Virtual Machine (EVM), the digital mechanism behind the cryptocurrency, so that decentralized applications can run and self-execute smart contracts in a secure and decentralized fashion. They’re your way of compensating miners who use their computational power to process and validate your transactions. 

Why ETH gas fees fluctuate

In most cases, Ethereum gas and fees are mainly determined by the supply and demand between the network’s miners. This means that they can decline a transaction if the gas price doesn’t meet their standards. It also means that the cost of gas fluctuates with the supply and demand for processing power. 

This is where the “Ethereum gas limit” comes in. “Gas limit” refers to how much you’re willing to spend on a transaction. Setting a higher gas limit lets you tell the Ethereum miners that there’s more work to do for a transaction. At the same time, miners can ignore your transaction if you set the gas limit too low. This is why are gas fees so high on a particular day and time.

To simplify it further

Let’s put it into real-world examples. Running your car for X miles will require Y gallons of fuel. In the same breath, transferring X amount of money from your bank account to a friend’s may cost you Y dollars in processing fees. 

In both cases, X is the utility value and Y indicates the cost of performing the process. Similarly, a smart contract on the network may be worth 50 ether (X) and the gas price required at the time would be 1/100,000 ether (Y). Ethereum miners are then rewarded with this particular fee in return for their computational services. 

When are ETH gas fees lowest?

Looking to save money on your Ethereum transactions? Well, you’re in luck. We studied Ethereum gas charts and found the best times to transact. 

The busiest times and the most expensive times are on weekdays from 8 AM to 1 PM (EST). This comes as no surprise because Europe and the US are all fully awake and at work during that period. By contrast, the least busy time is between midnight to 4 AM (EST)—when most of America is asleep, Europe is just about to start their day, and Asia is finishing up their workday. 

Therefore, the best time to make an ETH transaction is on a Saturday or Sunday from 2AM to 3AM (EST)—that’s when ETH gas prices are at their lowest. On the other hand, the worst times are on Tuesdays and Thursdays, when the network is at its busiest and gas prices are at their highest. 

Day The time when ETH Gas is lowest (EDT/EST)
Sunday 2 AM to 3 AM
Monday 1 AM to 2 AM
Tuesday 6 AM to 8 AM
Wednesday 11 PM to 7 AM
Thursday 1 AM to 3 AM
Friday 10 PM to 8 AM
Saturday 2 AM to 3 AM

All this data means that if you hold off a bit on your transactions or send lower fees for low-priority transactions knowing that they’ll be confirmed in a few hours, you could save some gas in the process. 

With the price spikes of Ethereum (and with it, its rising fees), it might be worth looking into how you could save some gas. Find the best times to buy Ethereum and then plan them accordingly. Who knows? It could save you a lot of money. 

Why does the ETH gas system exist? 

The concept of gas was introduced so that Ethereum’s network could distinguish the computational costs from other expenses. By having a separate unit for this purpose, a practical distinction is created between the computational costs of the EVM and ETH’s actual valuation. 

Other than that, there’s other main reason that this system exists: incentivization. We have to remember that Ethereum is still using the Proof-of-Work (PoW) system, which means that they heavily depend on the hash rate of their miners. The more miners there are, the higher the hash rate. The higher the hash rate, the more efficient and secure the system is. 

To attract more miners into the system, developers have to ensure that Ethereum mining is as profitable and as alluring as it can be. On the Ethereum blockchain, there are two ways miners make money. 

The first is pretty simple: mining blocks and getting block rewards. The second way is by controlling a block and ensuring that transactions are put in. This is where the gas system comes in. To put transactions in the block, miners have to use their computational power to validate smart contracts, which they can charge for. Essentially, this is the miner’s fee, and it motivates miners to actively participate in the Ethereum ecosystem. 

Why are ETH gas fees so high?

There are a couple of reasons why gas fees get so high. Mainly, gas prices increase when the network gets congested. However, one other possible reason ETH gas prices can get up is the whales—wallets that hold over 20 ETH (around 65,000 USD at the time of writing). 

By looking at charts at the points when both spikes coincide, it can be correlated that the fees increase when these whales make transactions. The times when the network is least busy is the time when Ethereum gas fees are lowest. Although we can’t be certain that they’re the main reason why prices surge, it can be deduced that they play a significant role.

Why doesn’t Bitcoin have this system? 

Bitcoin (BTC) was created in 2009 by Satoshi Nakamoto as a new type of currency that could be transferred between two people without the need for a middleman. It was also a currency that was completely decentralized. 

But that was it. Although it was revolutionary, BTC only allowed for monetary transactions—there was no way to add conditions to these transactions. 

Andy could send Bruno 5 BTC, but he can’t put conditions on that transfer. For example, let’s say that for Bruno to get the 5 BTC, Andy needs specific tasks completed first. These types of conditions would require extremely complex scripting. Something was missing… and that something was a smart contract

Smart contracts are automated and self-executing contracts that can help you exchange property, money, or anything of value in a way that’s transparent and conflict-free without the need of a middleman. 

Potential solution to the Ethereum gas problem

As unique as it is to Ethereum, gas fees raise a couple of concerns for ETH users. Despite how high fees can get, it’s a standard feature on the Ethereum network. Granted, there are extra steps one can take to avoid these high fees, but it’ll require a lot of education and patience. 

The high gas fees affect many great things on the ETH network—ERC-20 token purchases, micropayments, NFT markets, and more. 

To put this into a real-world example, let’s say that you’re looking to get yourself an NFT that’ll set you back around 100 USD. Would you be able to justify that purchase if the gas fees are just as expensive as the actual NFT? In this case, you’d probably think twice and possibly try to save on fees. 

Given that gas fees are becoming a problem on the ETH network, what could possibly solve it? One solution could be to add a Layer 2 solution. Digital ledgers like Bitcoin and Ethereum are inherently flawed in that transactions tend to slow down the more people use them.

Adding a Layer 2 solution on top of the Ethereum network could take transaction data off Ethereum, compress it, and publish it onto the blockchain for a fraction of the time and cost. 

Think of how well the Lightning Network has worked with Bitcoin. Ethereum having a Layer 2 solution of its own could make ETH transactions more cost-effective. 

*Disclaimer: The content of this article is for informational purposes only. The opinions expressed here are not meant to be taken as financial, investment, or any other advice, nor do they express the opinion of Paxful.

*This blog was originally published on March 26, 2021 and updated on January 21, 2022.