NFTs (Non-fungible tokens) have seen unbelievable acceleration as almost everyone is going after them. From general people to celebrity artists, it seems everyone is making a fortune (or maybe trying to make a fortune) with NFTs by selling their digital arts.
Well, the craze and enthusiasm indeed truly sums up the popularity of NFT. But, does everyone really understand it?
The answer is a big NO. And it gets even more complicated when it comes to the NFT gas fee. Yes, people understand that gas fees are the medium to transact to buy or sell NFTs. But is that all?
Well, gas fees for NFT are way more complicated than most people think. In fact, misconceptions about gas fees for NFT might compel you to pay more for it than your NFTs selling price.
Thus, we have come up with this article to simplify your idea about blockchain gas and related to NFTs transactions. We will further show you ways to reduce the gas fees to get a better deal for your NFTs.
So, are you up for the deal?
Let’s start exploring to save your dollars and make a high fortune in the NFT and blockchain market.
What Is NFT Gas Fee?
Before we head directly into the gas fees of NFT and where you would need it, let’s discuss gas meaning in NFT and the blockchain industry.
To simply put it, gas is much like real money in the financial world, but unlike real money, gas is used virtually. But, even this simplification of NFT gas is misleading.
So, here’s the technical answer-
“Gas in NFT and Ethereum Blockchain refers to the measuring unit for computation power of blockchain and NFT transaction. Every NFT transaction is valued upon its computational power, and its unit measurement is known as gas. The gas fee is required to complete the computational step as it works as the fuel required to supply the necessary energy for the computation.”
In short, the gas fee you pay is the compensation of the energy lost for the computation process to mint the NFT tokens.
Now, imagine the scenery. When you put fuel in your car’s engine, it speeds up the car’s acceleration and helps it drive forward. The case is relatively similar to NFT gas too. It fuels every blockchain action you need to design, build, sell and buy digital arts or NFTs.
Now that you have a clear idea about NFT gas, let’s focus on the Gas fee for NFT.
Everyone must go through a series of computational sequences to perform even a minor transaction in the blockchain industry. Next up, you will need resources to accomplish each of these sequential computation steps. You need to pay to buy or get these resources.
The gas fee is the amount you will use to pay for these resources so miners can mine for you. As an end-user, you have to pay for the gas, and it’s the gas fee.
A basic note:
It would be best if you realized that the gas fee is different from Ether which is the cryptocurrency of Ethereum. But, the gas fee is linked with Ether.
A small fruction of Ether makes every gas fee. The gas fee unit is known as ‘gwei’ and is a small fraction of Ether, as we described. One gwei is equivalent to 0.000000001 ETH.
In general, you need to pay the miners a few gwei to perform your mining task. Also, it is required for any transaction you will make in the blockchain world.
Why Is NFT Gas Fee Important?
You might wonder about the importance of gas fees since NFTs are virtual properties. The gas and the fee associated with it will largely stop Ethereum and blockchain spamming. Since users have to pay in gas for every computational step to provide it with the required energy, none can use the computational process as per their wish.
It helps the Ethereum authority to regulate the entire mining and transaction process. Henceforth, it boosts the security of your Non-fungible Tokens and their transaction and mining process.
Usually, users need to pay the gas fee to the miners. Therefore, miners accelerate their mining process through their computational steps. It runs the smart NFT contracts. On top of it, minors will get their essential cryptocurrency in exchange for the gas and control the entire blockchain system. Hence, the gas fee is required to continue the blockchain processing and accelerate mining worldwide.
What’s The Use of NFT Gas Fee?
The world of NFTs and blockchain are inseparable from gas fees. Almost every action you will take in NFT, from mining to selling, needs gas fees, be it in a big or small amount. The gas fee is the primary requirement for converting ETH to WTEH and transferring the funds to mining.
The following points will elaborate your conception on exactly where you need to pay the gas fees in the NFT world.
Creating or Minting an NFT
This idea is pretty obvious, and everyone should be aware of it. You will need to buy resources to mint tokens or create your NFTs, and for the resources, you must pay the gas fees.
Creating NFTs in blockchain requires you to mint tokens for it in the first step. The mint further refers to the process of putting up all the metadata and its associated information in one block of the large blockchain. The information also includes NFT’s smart contract.
You need to accomplish the entire minting process for creating your NFTs by paying gas fees. Also, you might choose the option of lazy mining. But, not all marketplaces support lazy mining for NFT tokens. Two popular and reliable marketplaces for minting are Rarible and OpenSea.
But, it is a lengthy and undependable process. Hence, most miners and NFT creators pay a gas fee to the miners to accelerate the process.
Selling and Listing an NFT
The NFT gas fee is more directly associated with the selling of NFT, and that’s where most buyers find it truly complicated. Thus, most NFT sellers are confused about it and later end up paying more for the gas fees requirement than their original profit.
The confusion comes from variable rules in various NFT marketplaces. For instances:
- Generally, the NFT marketplace won’t charge fees when you enlist your NFT for sale. But, some markets charge you right when you list the NFT for sale.
- The marketplace will mostly charge the transactional and gas fees once you have sold your listed NFT. This fee applies to sellers.
- On the contrary, when you sell your NFT at a fixed price, many marketplaces will charge the fees, including the gas fee from the buyers.
Therefore, we suggest you carefully check the marketplace rules and regulations for selling and buying NFTs to know who will pay the gas fee.
Also, remember one important point. If you wish to compete for the highest bid for NFT auctions, you need to pay the gas fees before the bidding in most marketplaces. As we described, OpenSea will bear the gas fee charged during the auction process for you. When your NFT is sold in the auction, you need to pay OpenSea for the gas fees.
Long story short, selling NFT requires gas fee payment. But the person who will pay for it (the seller or buyer) will depend on the marketplace terms.
For Buying an NFT
Of course, NFT sellers go through the dilemma of who will pay for the gas fees, making the entire transaction process as complicated as possible. But what about the buyers or resellers? Well, it seems that even NFT buyers got no respite from the complexity of gas fees for NFTs.
A buyer might need to pay the gas fees for the following processes-
- You need to pay the required gas fee for your favorite NFT when you order it.
- You may even need to pay the gas fee if you cancel your order.
- When you transfer the cryptocurrency to the seller’s wallet from yours, you again have to pay the gas fees required to complete the transaction.
But, your payment list doesn’t end here. Are you surprised? We guess you wonder where I should need to pay for further gas fees.
Here’s the answer-
If you have bought a lazily minted NFT, you need to pay for its minting resources in gas fee too. So be aware of it if you decide to get a lazily minted NFT.
What’s more, when you transfer the NFT to another wallet, you also need to pay a minimal amount of gas fee for it. And finally, when you resell your NFT, you must also pay the royalty fee. It is often written on the smart contract of the NFT. And this payment is made with the gas.
The Reasons for Gas Fee Fluctuation
On November 22, 2021, the gas fee value was 151.88. A month later, on December 22, 2021, the price of gas fee dropped to 81.72. And on January 10, 2022, it went up to an unbelievable 218.55 units.
This data truly implies that the gas fee fluctuates more rapidly than you might anticipate. This fluctuation indeed makes the understanding of gas fees even more complicated. The rise and fall of gas fees pricing follow the simple economic rule, “Supply and Demand chain.”
When the demand for gas fees goes up and supply shrinks, its pricing increases, on the contrary, gas fee pricing falls when the supply increases in the NFT market.
The supply and demand chain of gas fees is dependent directly on the blockchain and Ethereum network. This network is designed so that it often pushes the gas fees higher when there’s a high demand for it.
In fact, cases aren’t rare when the gas fees pricing has gone up by thousand dollars which is even more than the actual price of Ethers. Last but not least, the transaction speed for the NFT will also determine its pricing. You need to pay more for gas fees if you need to accomplish the NFT transaction faster than its original pace.
NFT Gas Fee and London Hard Fork Upgrade:
Previously, the pricing of the gas fee was pretty open, and it followed the open market rule. But the Ethereum network has got hold over it since the previous open market was unpredictable, although simpler.
On August 05, 2021, Ethereum went through one of the biggest upgrades in its history. It is technically referred to as Ethereum Improvement Protocol 1559. However, people call it popularly a ‘London Hard Fork’ upgrade.
This upgrade changed the calculation process of gas fees pricing. Now, you need to pay a base fee for transactions as every block has a base fee. The base fee is changeable depending on the marketplace and network requirements.
Thankfully, the base fee increase of every block is fixed at 12.5%. It means the maximum gas fee increase of a block could be 12.5% than the previous block. For instance, if the price of the previous block was 100 gwei (the unit of gas fee), the base price of the next block can’t be more than 112.5% gwei.
Since the base price increase is now fixed, you can predict the market by following the pricing trend of the previous blocks.
You can follow Ycharts to know the average price of Ethereum Gas. The list includes the average Ethereum gas price every day. So, you can better predict the changes and prepare for them.
Nonetheless, the gas fee pricing is also dependent on various points. The following instructions will help you determine the gas fee you need to pay for the mining and transaction of NFTs.
- You need to know the amount of gas you need for your NFT mining or transaction process completion.
- The gas fee is associated with the block size and transaction type. Usually, you need to pay more for the larger blocks in the chain for minting.
- Once you know the amount of gas, you need to multiply it with the base fee and tips. Then, you will get the required gas unit you will need for the process completion.
- Generally, you need 21,000 units of gas (gwei) to transfer the ETH from your wallet to another one. Also, you may pay a trip to the miner to accelerate the mining speed of your NFTs.
Long story short, the transaction fee for buying and selling NFT follows as follows:
Gas Limit*Gas Price= Transaction Fee
Is there any limit to gas fees?
The Gas limit refers to an amount you set as the limit you truly want to expend. Then you can wait until the gas price reaches your set limit. This limit is set on the transaction, and you will control it.
You need to wait for the transaction process to complete since it needs a fair amount of time for the gas fee to reach your preset limit. But, this wait is worthwhile since it saves you from overspending the gas fee without any practical benefit.
Problems Associated With Gas and Gas Fees
Although gas fee enhances control over the computational process of NFTs and secures it from spamming, it isn’t free from its problems either. The main problem of NFT gas fees is directly linked with artists who create versatile arts to sell and make their fortune.
Artists will find it truly challenging to create and sell their non-fungible tokens when the price of gas fees goes up significantly. What’s more, the gas fee valuation is entirely different from the digital asset valuation. Henceforth, at times the virtual cost of the asset you sell will be much more than its real cost in practical life.
Apart from the problems faced by the NFT sellers and creators, buyers also face its heat. Buyers need to pay the gas fee for placing an order, transferring the currency from one wallet to another, and even canceling any buying order. Also, the gas fee requirement varies depending on the speed of the entire transaction process.
Another problem linked with the gas fee for NFTs is attributed to newcomers in the NFT marketplace. They have little to no knowledge on how gas fees for NFT work, and so, at times, they end up paying more for the gas required to mine their art than they earn from selling it.
And here’s the most complicated and frustrating part about the gas fees of NFTs.
It will revert when you don’t have an adequate amount of gas to complete the transaction process. Sadly, you will be charged an amount of gas for it. Pathetic!
We hope the authority fixes these issues ASAP and simplifies the process.
How To Avoid Paying High Gas Fees?
There’s no doubt that gas fees, although necessary, have become a headache for Ethereum users. It has become even more problematic for NFT artists, and it becomes even more complicated when the price of gas increases further.
But it is unavoidable since you or other persons (sellers) must pay for the energy required for the computational steps necessary for the transactional process. Sadly, the gas fees for even the simplest transaction can be premium.
Henceforth, NFT artists and Ethereum blockchain users always look for ways to cut costs for gas fees. You can opt for the following suggestions to pay a reduced gas fee.
- Usually, there’s less demand for the gas fees for each block during late night and early morning. So, you may choose this period to complete your transaction process.
- Although Ethereum is known as the only eligible blockchain currency for NFTs, you can also use other blockchains. You may choose WAX. It stands for Worldwide Asset Exchange, and the best part about it is it doesn’t need any gas fees for the transaction.
- It would help if you said a Gas Limit. According to your willingness, the Gas Limit refers to the amount you fix for paying for the transaction. When you set the Gas Limit, miners will only transfer the amount when your preset gas limit becomes profitable for them. So, you don’t need to pay more than you want for it.
- It would be best if you tracked the ups and downs of gas fee pricing to predict when it reaches the lowest point. Multiple websites help you in tracking the gas fee pricing.
Gas Fee Navigation Websites And Tools
As a miner, you would want maximum profit for the mining process, dependent on the gas fee pricing. Similarly, NFT artists and sellers would want to find the lowest pricing for the NFT gas. It is possible when you can navigate the gas fee conveniently.
NFT Gas Station is an easy-to-use tool to predict the gas fee demand and supply in various marketplaces. It lets you know about the possible gas fee pricing on different occasions. On top of it, the smart tool will permit you to know about the gas fee for fast, slow, and average transaction time.
Rarible Analytics is also a good tool to track gas fees. However, it is limited to only the Rarible marketplace.
You can also browse different websites to know and predict the possible gas fee for the next few hours or days. It will help you decide whether or not you should complete the transaction.
NFT gas fee is undoubtedly one of the most complicated parts of the blockchain. But you need to live with it since the gas fee is the primary requirement for building, mining, selling, and buying NFT items through the blockchain marketplace.
The good news is that the Ethereum authority is working hard to solve the existing problems of gas fees ASAP. So, you can expect the process to become simpler and more profitable in the future. And as it stands, for now, we sincerely hope that this guide assists you in understanding how gas fees for NFT works and how to make a fortune out of it. It should help you save a few expenses and make your NFT life better and enjoyable.