Understand what are NFT gas fees, why they are important and how to calculate them before minting or investing in an NFT.
NFTs may be the latest craze sweeping the globe, and this new trend is attracting a slew of producers and artists who see blockchain-based technology as an innovative way to monetize their work.
Despite their popularity, NFTs and their associated concepts are far from being universally understood. While thousands of digital files are being traded every day, most people don’t understand the transaction cost associated with purchasing, selling, and transferring NFTs. Such charges are called gas fees.
If you want to trade NFTs, you might be curious about NFT gas costs and why they’re required. This guide will explain how NFT gas fees operate, why they’re necessary, and how to avoid excessive charges. Tag along!
What Is a Gas Fee?
Gas fees compensate for the computational energy necessary to perform transactions on the blockchain. The process is similar to the processing fees that credit cards may impose when moving money between accounts or paying bills.
In a nutshell, the gas fee is the cost of minting smart contracts on the blockchain. The amount of fees that must be paid is decided by the market demand for cryptocurrencies.
Much like you need gasoline to keep a car running, gas is used to complete all and any transactions on a blockchain. The less traffic you encounter on your way with your vehicle, the less gasoline you’ll need. In the same sense, if there’s too much traffic in the network while trying to make transactions, you’ll spend more on gas fees.
Why is a gas fee necessary for minting an NFT?
Gas is essential to guarantee that no one can send spam on the blockchain and maintain its security. As a result, the network will enact a rule that prevents individuals from arbitrarily using computational resources.
It is also a way to compensate miners for inserting user transactions onto the blockchain, as they will not enhance their compute capacity to conduct smart contract activities if there are no incentives. The more gas the miner produces, the safer the blockchain is. Furthermore, transactions will be speedier, and enough computer power will be available to complete them.
How to Calculate an NFT Gas Fee?
Each blockchain has its gas fee prices and limits. Here we’ll be diving into Ethereum’s example.
Several factors are considered to determine Ethereum’s gas fee: the current price of associated crypto assets, the transaction’s complexity, and the number of people participating.
Ethereum uses gwei as a unit of measurement for gas, and one gwei is equal to 0.000000001 ETH, or one-millionth of an Ether. One transaction will require a minimum of 21,000 of gas, so to estimate the total cost of gas fees, an investor must multiply the minimum amount of gas for the total of transactions by the current gas price in gwei.
Where to check Ethereum gas prices
Ethereum is the most popular blockchain out there, especially regarding NFT minting. Ethereum uses a technique known as the proof of work algorithm, and miners must overcome cryptographic difficulties to process and add sets of transactions to the blockchain.
Although it is a well-known network, it can also present high gas fees depending on Ether’s value for the day. So how to check its gas prices and gwei value beforehand to avoid expensive costs?
An interesting tool to check Ethereum’s gas prices is Etherscan.io. You can check the projected cost of transfers and interactions on the Ethereum blockchain and view the top 50 addresses that use the most gas and spend the most money on it.
Why is gas a problem for artists?
As mentioned before, gas fees are the costs of creating, purchasing, and selling NFTs. However, this has shown to be potentially problematic for NFT producers, as the costs of minting new NFTs can surpass their cost-efficiency.
It is especially challenging for unknown and independent artists to develop and sell their work when high gas prices. The artwork’s perceived worth will suffer if they try to lower their rates to match rising gas prices. Costs may be substantially higher than the real cost of the assets you’re selling since gas prices fluctuate from the actual worth of the digital assets.
Buyers, as much as sellers, are affected by rising gas prices. Buyers must pay for gas anytime they place or cancel an order. Gas costs apply to actions such as making a purchase or moving the NFT to another wallet based on the speed with which they require transactions. However, new platform vendors are frequently ignorant of this, and as a result, they make little to no money on their deals. If the gas is insufficient, the transaction will be reversed, and you will be charged again.
Consider the following scenario: you’re completing a transaction on Ethereum valued at roughly 20 ETH. If the gas price isn’t high enough and your transaction fails, you’ll get 20 ETH minus the gas used in the unsuccessful transaction.
Tips to avoid paying high gas fees
Although gas fees are inevitable when creating and buying NFTs, there are some tips and tricks that one could try to avoid exorbitant costs. Here are some of them:
- Less demand means lower gas expenses. Completing transactions early in the morning or late at night can best for less traffic on blockchain networks.
- Choose other blockchains besides Ethereum. There are many options out there that offer lower gas prices or even don’t charge at all, like Worldwide Asset Exchange.
- Establish a limit for how much you wish to spend on gas. By doing so, you ensure that your transaction is only completed when it’s lucrative for a miner to do so without ripping your budget.
- Keep track of gas prices. When you know the record of gas prices of a particular network, it is easier to estimate how much you’ll spend when you decide to complete a transaction.
Is it possible to mint an NFT for free?
There is no way to mint an NFT entirely for free, but it is possible to avoid minting costs and gas fees at first.
Through the lazy minting process, the NFT creator can pay all associated minting costs after the asset is sold, not having to expend any money before they actually have made some profit. The NFT marketplace OpenSea, for example, offers free minting but charges users 2.5 percent of the final sale value of their NFT work.
NFT gas comparison
We’ve collected information about the gas fee guidelines and prices from the most prominent NFT marketplaces available. Check it out!
This platform has the most registered creators and can handle a wide range of file types, including pictures, video, 3D, and other physical and non-physical items. You will not be required to pay any additional gas expenses when you mint, but you’ll be charged a 2.5% commission fee on all sales.
Rarible is one of the most trustworthy major NFT marketplaces, allowing producers to mint NFTs on RARI and ERC721.
They’ve been offering “Gas-less minting”, eliminating upfront costs. Rarible also charges a 2.5%service fee.
Mintable is another up-and-coming NFT marketplace. Users can pick between the “Traditional” and “Gasless” methods. When choosing to go Gasless, your NFT will not appear in your wallet until someone buys it. Mintable charges a 5% service fee after the sale.
With Zora, creators can mint their works on ERC20 and trade NFTs in multiple currencies. Zora doesn’t charge service fees at the moment but does charge gas fees during the minting process.
Hicetnunc has exploded in popularity for offering alternatives to ETH, which comes with high gas fees. Instead, all NFTs are traded on Tezos with a less expensive gas fee. Hicetnunc charges gas fees at the beginning of the minting process alongside a 2.5% commission, but gas fees usually don’t cost more than a dollar on this platform.
Undoubtedly, gas fees can represent a problem for creating and purchasing NFTs, leaving them to a select group of artists and investors. When thinking about starting the NFT minting process or investing in one, it is essential to remember that it will be necessary to have a budget for gas fees.
Even so, the good news is that much effort is being put into reducing gas fees and making NFTs more accessible to a broader audience. It is expected that the main blockchain networks will soon turn their attention to this issue and focus on growing the NFT industry.
Would you like to start investing in the most impactful crypto gaming, NFT and metaverse projects with GamesPad? Learn how in this comprehensive tutorial!
Disclaimer. This material should not be construed as a basis for making investment decisions or as a recommendation to participate in investment transactions. Trading digital assets may involve significant risks and can result in the loss of invested capital. Therefore, you must ensure that you fully understand the risk involved, consider your level of experience, investment objectives, and seek independent financial advice if necessary.