Ethereum: Are transaction fees now required? Is there a way to avoid them?
As a user of blockchain.info’s Ethereum wallet, you are probably familiar with the convenience of being able to transact without paying fees. Recently, however, it’s become increasingly clear that transaction fees on the Ethereum network are not only optional, but inevitable.
The Rise in Transaction Fees
In 2020, Ethereum experienced a surge in transactions, largely driven by the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs). The increased demand for bandwidth and computing power led to higher transaction costs, with fees soaring to record highs. According to data from Chainalysis, the average transaction fee on Ethereum increased from around 0.0005 ETH per block in May 2020 to over 1 ETH per block in December
Statement from Blockchain.info
It appears that blockchain.info’s wallet has been quietly adjusting its fees in response to changes in the network. According to a recent thread, the blockchain.info team explained that their fees are “optimized for a decentralized and permissionless ecosystem” (Source: Twitter). Essentially, they use a combination of techniques, including:
- Increased transaction processing power: By distributing computing power across multiple nodes on the Ethereum network, blockchain.info has reduced its reliance on centralized nodes and reduced its overall processing time.
- Improved network congestion management: The team uses advanced algorithms to manage network congestion, which helps reduce the number of transactions that need to be processed.
Avoiding transaction fees: Are there workarounds?
Even though transaction fees are now a necessary part of the Ethereum ecosystem, there are still some workarounds you can use to minimize your costs:
- Use a fee-free wallet alternative: Consider using a wallet like MetaMask or Trust Wallet, which offer cheaper and more feature-rich alternatives.
- Batch transactions: Use the “batch” feature of blockchain.info’s wallet to perform multiple transactions at once. This can help reduce the total number of fees required.
- Wait for block times to increase: If you wait for a particular transaction to process before performing another one, consider waiting for the block time to increase (e.g. from 15 seconds to 2 minutes).
- Consider using off-chain transactions: Off-chain transactions can help reduce demand on the Ethereum network and lower fees. However, these are more complex and require specialized tools.
Conclusion
While transaction fees may not be as painful as they once were, it’s clear that blockchain.info has taken steps to mitigate their impact on users like you. By understanding how fees work and being aware of potential ways around them, you can minimize your costs and continue to use the Ethereum network without breaking your bank.