Introduction: Why do blockchain transactions require fees?
In the traditional financial system, banks and payment institutions charge transfer fees to cover operating costs and prevent junk transactions. Blockchain networks also require fees, but their mechanism and calculation method are very different from the traditional financial system.
This article will explore in depth the nature, influencing factors, and optimization strategies of blockchain transaction fees (Gas Fee) to help users and developers better understand and reduce transaction costs.
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1. The Nature of Blockchain Transaction Fees
1. The role of handling fees
Blockchain transaction fees have three core functions:
• Incentivizing miners/validators: In PoW (Proof of Work) and PoW (Proof of Stake) networks, miners or validators need computing resources to confirm transactions, and transaction fees are used as rewards to incentivize them to maintain network security.
• Prevent spam transactions: If there is no handling fee, attackers can launch a large number of invalid transactions (such as DoS attacks), causing network congestion. Handling fees increase the cost of attacks and ensure stable operation of the network.
• Resource allocation mechanism: On smart contract platforms such as Ethereum, gas fees are used to measure the consumption of computing, storage, and bandwidth resources to ensure fair distribution.
2. Calculation method of handling fee
The calculation methods of transaction fees for different blockchain networks are different:
• Bitcoin (BTC): Transaction fee = transaction data size (bytes) × fee rate (sat/byte)
• Ethereum (ETH): Transaction Fee = Gas Limit × Gas Price (Gwei)
• Solana (SOL), Avalanche (AVAX): Fixed rate or dynamic adjustment
Among them, Gas is the core concept of Ethereum, representing the computing resources required to execute smart contracts or transactions.
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2. Four major factors affecting transaction fees
1. Network congestion
The transaction throughput of the blockchain network is limited (e.g., 7 transactions per second for Bitcoin and 15-30 transactions per second for Ethereum). When a large number of users initiate transactions at the same time, the transaction fee will increase due to competition. For example:
• NFT craze in 2021: Ethereum Gas Fee once soared to over 1000 Gwei, and the cost of a single transaction exceeded $100.
• Bitcoin halving market: When the market is active, BTC transaction fees may increase by more than 10 times.
2. Transaction complexity
• Simple transfers (such as ETH transfers) consume less Gas (about 21,000 Gas).
• Smart contract interactions (such as Uniswap transactions and NFT minting) may consume hundreds of thousands of Gas and have higher transaction fees.
3. Gas Price
Gas Price is determined by market supply and demand, and users can adjust it by themselves:
• Low Gas Price: Transaction confirmation is slow and may be ignored by miners.
• High Gas Price: Transactions are packaged first, but the cost increases.
4. The underlying mechanism of blockchain
• Bitcoin: Adopts a “highest bidder wins” mechanism, and transaction fees vary with competition for block space.
• Ethereum: EIP-1559 introduces a base fee + tip model, where the base fee is destroyed and tips are used to reward miners.
• Solana, Avalanche: use fixed low fees, suitable for high-frequency trading.
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3. How to optimize transaction fees?
1. Choose off-peak trading
• Bitcoin: The block interval is about 10 minutes, and the transaction fee is lower during non-peak hours.
• Ethereum: You can check the real-time Gas price through Etherscan Gas Tracker (https://etherscan.io/gastracker) and choose to trade during the low period.
2. Adjust Gas Limit and Gas Price
• Gas Limit: Setting it too high will waste Gas, while setting it too low may cause the transaction to fail (but will still consume Gas).
• Gas Price: Can be adjusted manually using the “Advanced Gas Settings” of wallets such as MetaMask.
3. Use Layer 2 Solutions
• Ethereum: The transaction fees of Layer 2 networks such as Optimism, Arbitrum, Polygon, etc. are only 1/100 of the main network.
• Bitcoin: Lightning Network enables near-zero-cost micropayments.
4. Choose a public chain with low transaction fees
• Solana (SOL): About $0.01 per transaction
• Avalanche (AVAX): ~$0.1
• BNB Chain (BSC): about $0.2
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4. Future trends: Will transaction fees decrease?
With the development of blockchain technology, fee optimization solutions continue to emerge:
1. Ethereum 2.0: Sharding technology will increase TPS and reduce Gas Fee.
2. Rollup technology (such as zkSync, StarkNet): further reduce transaction costs.
3. Modular blockchain (such as Celestia): Separate the execution layer from the settlement layer to improve efficiency.
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Conclusion: Understand the fees and optimize your trading strategy
Blockchain transaction fees are a necessary mechanism for network operation, but users can reduce costs by choosing the right time, adjusting Gas parameters, using Layer 2 or low-cost chains, etc. In the future, with the development of expansion technology, transaction fees are expected to drop further, promoting the large-scale application of blockchain.
