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NFT gas fees, explained
Buying, selling or minting digital assets means paying a gas fee for interacting with the blockchain.
Gas fees are often used to refer to transaction fees with various blockchains, but it’s a term native to Etheruem. Ethereum is the most commonly referenced and widely-used blockchain, especially with NFT marketplaces and other decentralized applications (dApps).
A gas fee is similar to a processing fee of sorts — the fee that’s used to power the blockchain. If you sell or buy an NFT, or tokenize a file on the blockchain, you pay a gas fee to cover the transaction. Gas fees also help stop scammers from trying to spam a network with fake transactions, since each transaction costs some ether (ETH).
That’s the surface explanation, but what exactly are gas fees and why do they exist? Turns out, even decentralized markets aren’t completely free.
Blockchains run on gas
A blockchain is a network of computers called nodes that work together to verify information and pass data along in blocks. Processing transactions and adding information to these blocks requires power, which is where gas fees come into play.
To incentivize these nodes to process the transaction you request — minting, transferring, smart contract, etc. — you pay a gas fee so it includes your transaction on the next block.
The amount you pay in gas fees depends on many things, mostly the difficulty of the transaction. The simpler the transaction, the less gas required, so the less you have to pay. Gas fees are paid in Etheruem’s native currency, ETH.
How much are gas fees?
Gas fees vary by the second, and can be anywhere from $1 to $1,000, depending on the complexity of the transaction and the congestion on the network.
Factors that determine NFT gas fees
There are three main factors that determine NFT gas fees:
- Transaction complexity. Some transactions require less gas than others. Simple transfers across the Ethereum network, such as sending ETH to another wallet, are typically less expensive than processing a complicated smart contract.
- Network congestion. If Etheruem spikes in popularity, the fee for executing a transaction on the chain can increase, simply because there are more requests clogging the network. As more applications are built on Ethereum, like marketplaces and crypto games, you can expect the cost of powering these transactions to increase.
- Processing speed. The speed at which you want the transaction to process can determine the gas price, too. Want a speedy, nearly-instantaneous transaction? Expect a higher gas fee. Ok with waiting? Pay a lower gas fee. Think of it like paying extra for express shipping on an item vs. waiting several days for regular shipping.
How to calculate NFT gas fees
The formula for Ethereum gas fees is:
Gas units (limit) X (Base fee + Priority fee) = Gas fee
Gas prices are denoted in “gwei” which is a denomination of ETH. Each gwei is 0.000000001 ETH. The minimum amount of gas to process a transaction is 21,000 gas units, so a base price of 200 gwei (0.000000000712 ETH).
If you want to transfer $10 worth of ETH to another wallet, the gas price is the same as if you were transferring $1,000,000 to a wallet — remember that it’s not the amount you’re sending but the complexity of the transaction. The gas limit with a simple transfer is 21,000 units, and the gas price would be 200 gwei, or 0.0042 ETH, which is the amount paid to the miner.
You don’t need a formula to calculate the cost of each transaction. By starting a transaction with your crypto wallet, the gas price will be automatically calculated and you can choose to accept or decline the transaction.
Transactions that require a gas fee
Most blockchain interactions require a gas fee, including:
- Minting an NFT
- Buying an NFT
- Transfering an NFT to a wallet
- Sending cryptocurrency to a wallet
On the popular NFT platform OpenSea, there’s a one-time gas fee for setting up your account for your first listing. After that initial setup, listing other NFTs for sale doesn’t require another gas fee, but gas fees for tokenizing new assets still apply.
How do you mint NFTs without paying a gas fee?
Nearly every NFT marketplace requires users to pay the gas fee required to tokenize a file on the blockchain. However, there are some NFT marketplaces that allow for “gasless minting,” such as Mintable.
There’s a catch, though. This usually means having to pay a higher seller fee, or paying the gas fee after the NFT is sold. Mintable normally charges creators 2.5% of the NFT’s final sale price — gasless NFTs are charged 5% of final price.
Ways to avoid high gas fees
Gas fees are typically unavoidable, but there’s a few ways to help minimize the cost. Gas fees vary, so these tactics aren’t guaranteed but are worth looking into:
- Make transactions at slow times. Similar to how it’s better to contact consumer service at its “slow time,” requesting a transaction on a blockchain when fewer people are using it can save you some gas fees. Monday through Friday are typically the busy times, so if you can, make transactions on the weekend for possible savings.
- Watch ETH price. Remember that gas fees are paid in ETH. If ETH is high, it means paying more. Watch market values on up-to-date platforms that update frequently, such as CoinMarketCap.
- Opt for a slower transaction time. If you’re okay with waiting longer for a transaction to process, opting for a slow transaction over a fast one can save you some ETH.
Gas fees are what power a blockchain. Instead of a centralized entity governing transactions, a blockchain relies on nodes working together to keep everything shipshape.
Whether you’re minting NFTs, selling or buying them, gas fees are part of being in this market. They can be a hindrance to new creators — especially if gas is especially high — but with some research, good timing, or using marketplaces that subsidize gas fees, you could minimize the cost.
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