5 Blockchain Networks With Ridiculously Low Gas Fees
Storytime
I remember the first time I began transacting with crypto, it was a mind-blowing experience!
Crypto has been around since 2009 or so and I just started transacting with it in 2021. Ethereum was the first blockchain network I interacted with.
I would send and receive money on the Ethereum blockchain mainly with the ERC-20 USDT token because it was a stable coin and less risky than the ETH crypto.
The first few months of transacting with this blockchain were okay because it had very low gas fees, and transactions were processed very fast. This happened for a while, until a few months in, I noticed that gas fees went over the roof.
Right after the famous “Ethereum Merge” in September 2022, sending money on the Ethereum blockchain became very expensive. Gas fees quadrupled, transaction speed became quite slow, and it just went downhill from there.
Note: In the early days when I started using the Ethereum blockchain to send and receive Crypto (e.g. 100 USDT) the gas fee would be $0.9. Currently, the gas fee to send this same amount of Crypto is over $9.
So what happened? Why are gas fees on the Ethereum blockchain so high? In this article, I will be discussing reasons why gas fees are so high on the Ethereum blockchain and other excellent alternatives to Ethereum.
Causes of high gas fees on Ethereum
Ethereum is the world’s largest smart contract blockchain. Creators & developers on this blockchain can make use of smart contracts to build several decentralized applications and ecosystems on the Ethereum blockchain.
Ethereum is home to thousands of decentralized applications, NFT marketplaces, DeFI platforms, GameFI platforms, and DAOs.
The constant building of decentralized applications on the Ethereum blockchain, and the ease in doing so, makes it one of the most sought-after blockchain for Web3 builders.
Today Ethereum has over 3,000 dapps on its blockchain, and over 30,000 dApps running on its side-chain Polygon.
In some way, these decentralized applications on Ethereum have caused massive congestion on the blockchain thereby increasing gas fees and reducing transaction speed time.
Besides this, here are other reasons why Ethereum has very high gas fees:
Supply and Demand
Gas fees on Ethereum are subject to the principles of supply and demand. When the demand for network resources, such as computational power and storage space, exceeds the available supply, gas fees tend to rise.
The popularity of Ethereum and the increasing complexity of transactions and contracts contribute to this heightened demand, resulting in higher gas fees.
Base Fee and Priority Fee
Gas fees are composed of two primary components: the base fee and the priority fee (tip).
The base fee is set by the network and adjusts dynamically based on network congestion. As the number of transactions and contracts being processed increases, the base fee also rises.
On the other hand, the priority fee is determined by users and is paid to validators who include transactions in blocks.
Users can set a maximum fee per gas unit to avoid overpaying during sudden spikes in the base fee.
Limited Block Capacity
Ethereum’s blocks have finite capacity, meaning they can accommodate only a specific number of transactions or contracts.
Despite the London Upgrade introducing variable-sized blocks with a target capacity of 15 million gas units, the maximum limit remains at 30 million gas units per block.
This limitation leads to block space scarcity, encouraging users to compete for inclusion in available blocks, which, in turn, drives up gas fees.
Blockchain Networks with Low Gas Fees
Gas fees play a crucial role in blockchain networks, ensuring the processing of transactions and contracts. Below are the top 5 blockchain networks with very low gas fees you can try out today.
Tron
Just like Ethereum, Tron is a blockchain that supports smart contracts and decentralized applications. However, Tron uses a distinct mechanism for gas fees.
Tron calculates gas fees with bandwidth and energy. Bandwidth allows data transfer, and energy enables computation.
Both depend on a user’s stake in the network, tied to their locked-up TRX (Tron’s cryptocurrency). If a transaction stays within the limit, the gas fee is zero; otherwise, a fee in TRX covers the excess.
Tron’s lower gas fees result from its superior scalability and output, processing up to 2,000 TPS compared to Ethereum’s 15 TPS. This minimizes congestion and reduces the need for high fees.
Bitcoin
Bitcoin charges transaction fees based on transaction size in bytes. Fees are influenced by block space supply and demand, limited to 1 MB per block.
Users set the fee rate they’re willing to pay per byte, and miners prioritize transactions for faster confirmations.
Both networks focus on scalability and fee reduction, however, Bitcoin has employed SegWit and Lightning Network for increased capacity and speed without compromising security or decentralization.
Cardano
Cardano (ADA) is another blockchain platform that supports smart contracts and decentralized applications.
Cardano’s lower network usage and higher throughput, have led to a more predictable and stable fee structure based on transaction size and a fixed parameter called the minimum fee.
Cardano’s energy-efficient and secure proof-of-stake consensus mechanism called Ouroboros further reduces the computational complexity compared to Ethereum’s proof-of-work.
On the Cardano blockchain, slot leaders are randomly chosen from a stakeholder pool to produce blocks, eliminating the need for miners to compete in solving cryptographic puzzles.
Litecoin
Litecoin was designed as a faster and cheaper alternative to Bitcoin and it boasts lower transaction fees and faster mining.
Litecoin’s low gas fees can be attributed to several factors. Firstly, it uses a distinct mining algorithm called Scrypt, requiring specialized ASIC miners.
This hinders any single entity from dominating the network and driving up fees.
Additionally, Litecoin has a shorter block time compared to Ethereum. Litecoin’s block time is approximately 2 minutes and 39 seconds, enabling it to process more transactions in less time. This reduces demand and subsequently lowers fees.
Litecoin employs a fee structure based on transaction size in bytes. The average transaction fee for Litecoin is around $0.043.
NEAR Protocol
NEAR Protocol is a blockchain platform focused on scalability, usability, and decentralized applications.
NEAR Protocol’s gas fees are low because of its high output which in turn results in more transactions per second, reducing congestion and gas demand.
Another reason for the low gas fees on the Near protocol is the implementation of a lower inflation rate and minimum gas fee and price flexibility.
NEAR sets a network-established minimum gas fee, adjusting it with significant NEAR token price changes for affordability and predictability.
Furthermore, 30% of gas fees go-to smart contract developers, burning 70%, thereby encouraging efficiency while reducing token supply and lowering gas prices.
Finally!
While networks like Ethereum face challenges with high gas fees due to network congestion and complexity, several blockchain networks including layer 2 solutions built on Ethereum maintain remarkably low gas fees.
As blockchain technology continues to evolve, addressing scalability and fee reduction remains a priority.
These 5 blockchain networks mentioned above are excellent examples of efficient and cost-effective solutions for daily crypto users.
