6 ways to save on Ethereum gas fees
Dear Bankless Nation,
We said it last week in our Polygon tactic but we’ll say it again…
Ethereum gas fees suck for DeFi users right now.
The good thing is that everyday the industry getting closer towards the merge with Eth2 and launching other scaling solutions.
We’re seeing Ethereum L2’s like Optimism and Arbitrum (launching this wk??) getting closer to mainnet launch while sidechains like Polygon and xDAI continue to soak up whatever congestion they can.
But we still love using DeFi on Ethereum mainnet. Nothing quite like it. And it’s rewarding (who got their Gitcoin airdrop today?! 🚨).
So the question becomes:
What steps can we take to minimize gas fees?
William gives us six ideas.
Here’s how you save on gas and keep your precious ETH.
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6 Ways to Save on Ethereum Gas Fees
With demand for Ethereum hitting new highs, Ethereum gas prices have become painful. Spending all that gwei everyday can dig into your profits and can be a headache for any crypto native that’s actively using the network.
This tactic explores a handful of strategies you can take to lower and mitigate your gas expenses.
- Goal: Learn about gas-minimization techniques
- Skill: Intermediate
- Effort: ~30 min. to ~1 hour
- ROI: ETH savings from lowering your gas costs.
Ethereum Gas 101 ⛽
Gas is a fundamental element of Ethereum. Simply put, it’s the amount of ETH that users pay to perform an activity on the Ethereum network.
On a more technical level, gas is a unit of measurement that tracks how much it costs to execute computation for a specific action on Ethereum, like sending ETH, trading a DeFi token, minting an NFT, or deploying a smart contract.
You might be wondering: why have gas fees at all? Well, they actually play a big role in helping Ethereum operate effectively as gas fees prevent spam transactions as well as pay miners (and soon stakers with the merge of Eth2) in return for securing the network.
Gas is how you access decentralized computation on Ethereum, and it’s also part of what makes this computation possible. Gas is denominated in gwei, which amounts to 0.000000001 ETH.
If you hear someone saying “gas is 50 right now,” they mean you can expect to successfully complete an Ethereum transaction for ~50 gwei.
However, here this doesn’t mean you simply multiply 50 by 0.000000001 ETH to determine a price. This is where Ethereum’s gas limit comes into play.
The gas limit, currently 15 million units, marks a ceiling for how much gas can be spent in an Ethereum block. There’s also a gas limit for individual types of transactions, for instance a basic ETH transfer has a gas limit of 21,000 units.
So to figure out the gas fee of an activity, we just take a transaction’s gas limit and multiply it by the current gwei price. For instance, a 21,000 gas limit x 50 gwei x 0.000000001 ETH = a gas fee of 0.00105 ETH.
Why gas is expensive lately 🛢️
We have to pay ETH (gas fees) to access Ethereum’s block space. With the rise of DeFi and NFTs, Ethereum’s block space has become increasingly more valuable as demand for block space has recently exploded.
As a result, gas prices have spiked to crazy levels.
That’s because gas prices are determined by demand for block space which is a result from an auction-like process in which users “bid” with their willingness to pay for inclusion (i.e. set the gas fees) and then miners (and later stakers) accept and order transactions as they see fit.
Paying a higher gas fee thus gives you better chances of having your transaction processed quickly, so in periods where many users are trying to access Ethereum block space, gas prices push upward as people bid up what they’re willing to pay to use Ethereum in timely fashion.
Ethereum blocks are now full all the time! The people want what they want, and that’s Ethereum.
👉 Writer’s note: This fee-for-block-space system is what gives rise to ETH having commodity-like behavior!
Check out these Bankless resources:
How to save on Ethereum gas fees
Using Ethereum and trying all the things happening on Ethereum’s application layer are probably some of the most productive things you could be doing with your life right now (have you seen these retroactive airdrops?!).
Yet with demand for Ethereum so high lately, gas fees are pricey, and many folks are getting priced out.
The good news? Ethereum is currently amid building and transitioning towards its scaling solution, so expensive gas prices aren’t some indefinite concern. They’re an immediate concern while Ethereum remains in its current transitional period.
Additionally, there are a range of strategies and technologies available today that can seriously mitigate your gas expenditures. With a little bit of research and work, you can quickly get smart about gas and stop spending more ETH than necessary when you want to use Ethereum.
So all that said, let’s dive into the best ways to currently save on gas!
6 Ways to Save on Ethereum Gas Fees
1. Optimize your transaction timing
Ethereum gas prices can fluctuate considerably intraday as different on-chain events take place and as different parts of the world wake up and become active.
Accordingly, there are certain times where, on average, gas prices are typically lower. If you take stock of these times and target them for transactions, that’s a great start on the path to lowering your gas expenses. So…when are the best times to transact?
Generally speaking, gas prices are higher during the work week and lower on Saturdays and Sundays, so one easy thing to do is to start batching your transactions on the weekends.
As for actual time of day calculations, a recent report from Paxful determined the following:
“The busiest times and therefore, the most expensive times, are 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) —the time the people in the US are asleep, Europe is just about to start their day, while Asia is finishing up their workday.”
So there you have it — transact during these daily windows and your gas expenses have good chances of being lower than they would be otherwise!
2. Use Ethereum scaling solutions
Things are early in Ethereum’s scaling solution ecosystem, but the projects already live are impressive and improving every day. You can use these solutions to enjoy instant and ultra cheap Ethereum-centric transactions!
In this arena you have layer-two (L2) solutions, like projects based on Optimistic rollups or ZK-rollups, which provide their own super efficient infrastructure while inheriting all of Ethereum’s security guarantees.
Then you also have sidechains, like Polygon’s PoS chain or xDAI, which are effectively separate efficient blockchains but are specifically aligned with, and cater to, Ethereum.
As time goes on, it might come to be that you only occasionally interact with the Ethereum main chain and handle most of your crypto activities affordably on L2s and across cross-chain environments. So it’s certainly a good time to start familiarizing yourself with these solutions while things are still early.
Last month, I wrote a Bankless Tactic on “7 Things You Can Do on Layer 2.” It’s definitely a solid starting point if you want to dive in more. To give you an idea, activities presented in the piece included:
- Borrowing and lending on Aave via Polygon
- Trading perpetuals on dYdX via StarkEx
- Trading DeFi tokens on DeversiFi via Stark Ex
- Earning SNX staking rewards via Optimism
- Yield farming on Loopring via ZK-rollups
- Donating on Gitcoin via zkSync
Check out these Bankless resources:
3. Use gas tokens
In short, you can mint gas tokens when gas prices are low and then redeem them when they’re high, at which point you receive a refund in ETH to help cover your gas expenses.
Gas tokens work because of Ethereum’ storage refund system, which refunds Ethereum users that delete storage variables. This encourages people not to bloat Ethereum’s state.
So with gas tokens, you sort of take a snapshot of Ethereum’s state at the time of low gas prices and then essentially unlock that state when gas prices are higher to receive an ETH refund. Voila! Cheaper transactions.
Gas tokens actually clog Ethereum’s state size and lead to inefficient gas pricing, so it seems they’ll be phased out in the coming years and you’ll want to keep that in mind. In the meantime, they can lower your gas expenses so don’t rule them out for now!
For example, one popular gas token project is GasToken.io.
The project has two slightly different implementations, GST1 and GST2, but they both work similarly. To use either of these tokens, you simply navigate to their “Contract” page on EtherScan and call the “Mint” and “Free” functions. Whenever you free your tokens, you’ll receive a refund in ETH that’ll help cover your gas costs!
Check out this Bankless resource:
- 📰 How to get the best price on 1inch (info on 1inch’s CHI gas token in here!)
4. Use Dapps that minimize gas
Some decentralized applications on Ethereum explicitly provide gas-minimized products.
For example, there are Yearn’s V2 Vaults and KeeperDAO, which automate and batch users transactions together, so that instead of everyone having to manually pay gas fees one by one, everyone pays them together at once, which seriously lowers the gas expenses for everyone.
Another project to consider is the Balancer V2 trading protocol. The V2 system makes it so that Balancer is now one big vault instead of many constituent pools, which makes trading through Balancer now much cheaper gas-wise!
Using applications that have significant gas optimizations in their contracts is one of the easiest ways to save on gas fees. You just have to know which ones are the most gas efficient!
5. Strategize transactions through DeFi Saver
What if you could test out and simulate transactions without carrying them out, so you can get a sense for, and tinker with, how much gas you’ll pay before you have to pay it?
Well you can, through DeFi Saver’s new Recipe Creator and Simulation Mode!
Here’s how the process works. You use the Recipe Creator to line up any kinds of Ethereum activities you want, then you run Simulation Mode to test out these activities without paying any gas fees.
This system isn’t a direct way to save gas, but it is a way for you to fine-tune your transactions and that can help mitigate gas costs.
6. Use applications that offer gas rebates
Ethereum projects know their users are feeling the pain with gas fees right now. As such, some are offering gas rebates to their users to make up for that pain.
Earlier this year, Balancer rolled out a program that partially refunds your gas fees on select pairs with BAL, the project’s governance token, to anyone who trades through Balancer. Meaning if there are DeFi trades you want to make, consider making them through Balancer, as you’ll get a decent chunk of BAL back just for trading through the protocol!
These programs are new, but so far, are successful for the respective protocols. Wouldn’t be surprised if more protocols adopt similar programs in the future!
High ETH gas prices aren’t a permanent concern. With the advent of layer 2 scaling solutions and Eth2, these prices will come down considerably in the coming year.
Yet we do have to deal with these prices for now. So the next time you have to perform an Ethereum transaction, don’t just go mindlessly do it. Check what time of day it is, or if you can do the same transaction on a scaling solution, and so forth. You can save yourself a lot of ETH just by tightening up how you approach gas now!
- Save on gas fees with the above tips!
- Level up on the resources mentioned in this article