It’s frustrating as hell when you want to spend $10 to buy an NFT and the Ethereum gas fees to actually buy the NFT are $40. NFTs buys and sells are always more expensive than you usually plan for due to this annoyance. In this post I’ll discuss what the fees are, the best times to buy and sell to avoid high fees, or how to avoid fees all together. Why is this even necessary?
It all boils down to this principal: there is only one Ethereum blockchain- it’s a giant, decentralized permanent list and anytime a new transaction or smart contract is added to that list, it costs money for the computers to add that item to the list. Proof of work cryptos like ETH cost a lot of computing power and electricity, but are super secure. So in a way, you’re paying for the excellent security of the Ethereum network. That isn’t to say that it’s not ruinously expensive still.
What are gas fees?
Gas fees exist on a good number of cryptocurrency networks, but are most notable on Ethereum. This is because Ethereum is the most popular network that requires gas fees to be paid, and it’s the main network for all the top NFT collections.
Gas fees are the ‘toll’ you pay to have your NFT smart contract added to the blockchain. Since Ethereum is still a proof of work crypto, mining fees have to be paid to all the nodes on the network that are processing your transaction. It’s insanely expensive, and in my opinion a huge item holding cryptocurrency back from more adoption. Wasn’t crypto supposed to be cheap, fast, and easy? Yeah, it’s not right now.
These fees aren’t being paid to OpenSea- they’re being paid to people and companies with massive crypto mining rigs. OpenSea can’t refund any of this money because it isn’t receiving it in the first place.
The different types of gas fees you’ll pay on OpenSea
The first is the initialization fee. This is a smart contract execution telling the Ethereum network that your ETH wallet address will be one that can hold, buy or sell NFTs. This fee is a one-time fee. Thank God!
The next type of gas fees are recurring fees, which are the ones that can slowly rip you apart over time. These happen essentially anytime there is movement of an asset from one wallet to another (like an NFT transfer), plus some other things like canceling your bid on an NFT or freezing the metadata on your NFT collection. These are very similar to the Ethereum gas fees you pay from simply moving Ethereum from one wallet to another.
If you google “what are Ethereum gas fees right now” you’ll get the answer in what are called GWEI. A GWEI is simply one millionth of an Ethereum. The best way to find out what your gas fees are going to be is to just open your browser wallet (like MetaMask) and try and complete the transaction you’re looking to do. You’ll be met with the below screen showing the current gas fees. Usually I see it between $20 and $150, with a median around $30-$40. It’s nuts- I’m getting mad just writing about it.
When is it best to sell/buy for the lowest gas fees?
Ethereum gas fees on OpenSea are always changing. The reason for this is that the Ethereum network experiences different levels of congestion throughout the day. Some basic supply and demand dynamics are at play- when more people are trying to get their transactions executed, the miners are rewarded more money for processing transactions. When the network is congested, transactions take longer to process and thus have higher gas fees associated with them. The good news is that there are certain times of day when the network isn’t as congested and transactions are processed much more quickly.
Consensus shows that the cheapest Ethereum gas fees occur around 9pm to 11pm UTC- this is around 3-4pm US East Coast and 1-2pm Pacific. If you’re elsewhere, find out what time 21:00 to 23:00 UTC is in your time zone. If you’re a frequent trader and make trading only during this time window a habit, you’ll end up saving a lot of money.
Avoid fees altogether (mostly)
The ‘best’ solution for this is to trade NFTs that exist on networks other than Ethereum, namely NFTs on the Polygon network. OpenSea has loads of collections of NFTs on Polygon and a few other networks, so if you’re looking to get started without paying too much in fees (there are fees, but they’re really small) Polygon is a good start. Cardano and Solana are other smart contract cryptos that have cheaper fees.
If you have NFTs on Ethereum you were looking to sell, you could always just wait until fees go down really low. There’s no telling when that will happen though.
The future will be brighter
The Ethereum Foundation has (for years now) been promising a migration from a proof-of-work network to a much cheaper proof-of-stake network. This was originally dubbed Ethereum 2.0, but has been rebranded the Ethereum ‘consensus layer’. One can only hope that when ETH’s gas fees evaporate that more people will feel compelled to enter the crypto space and start buying and selling NFTs more. That way, when I want to buy a cheap $5 NFT, I can get for $5 or very close to $5.
The Ethereum network is only going to become more congested as time goes on and the price of ETH continues to rise. So, if you’re looking to buy or sell NFTs, it’s best do it sooner rather than later!
Until then, we’ll have to hold tough.