High Fees
Note: Data in this section last updated September 12th, 2022
Last updated
Note: Data in this section last updated September 12th, 2022
Last updated
“Gas” refers to the fee required to execute a transaction on the Ethereum network. Whether you want to transfer a token, vote in a DAO, loan your assets on Ethereum or mint an NFT, you must pay gas to incentive the miners to approve your transaction and include it on the blockchain.
Because space on the Ethereum network is limited – it can only execute around 25 transactions per second – priority is determined by an auction process. This means that gas can get very expensive when the network is busy.
Unfortunately, network usage has grown significantly over the last few years, which has caused fees to spike. For much of the first half of 2022, average fees exceeded $30. While we are in a bit of a lull at the time of writing, the 200-Day Moving Average transaction fee remains close to $10.00, a substantial increase from the $0.14 recorded three years prior.
Fees on the Ethereum Network Average Nearly $10.00 per Transaction
Keep in mind these are average fees for all transactions, including simple ones like a token transfer. As some transactions – such as minting an NFT or borrowing / lending ETH – are generally much more complex, it is not uncommon to see fees of several hundred dollars.
In fact, in times of extreme congestion, commonly known as “gas wars”, fees can be in the thousands. The most notable example of this occurred during the Bored Ape Yacht Club’s April 30th launch of Otherside, where users had to pay a minimum of $6K in fees to purchase land!
Unlike in traditional finance, transaction fees are independent of the transaction amount (i.e. it costs the same to send $1 or $1 million), so while this may not effect high-dollar users, it’s effectively crowding the average consumer out of the market.
These high fees have spawned the creation of many alternative blockchains – such as Avalanche, Solana, Cardano, Polkadot and Binance Smart Chain – that offer significantly lower fees and transaction times. For this reason, they are often known as “Ethereum Killers”.
