NFT Gas Fees And Efforts Aimed At Reducing These Expensive And Unpredictable Costs
Free Article Limit This Month
Yuga Labs, the creators of the multi-million dollar Bored Apes Yacht Collection NFTs, made high-priced headlines again earlier this month when it was reported that purchasers of their latest NFT venture, plots of virtual land known as Otherdeeds (to be used in their soon-to-launch metaverse game, Otherside) paid gas fees more than five times greater than the price of the NFTs they purchased . Reportedly, one purchaser paid a whopping $44,000 in gas fees for their Otherdeed NFT purchase. Although purchasers of Yuga Labs' NFTs may have paid some of the most exorbitant gas fees reported on recently, they are far from the only ones faced with paying hefty gas fees. So what are gas fees, why are they so expensive and what, if anything, is being done to reign them in?
Gas fees are, essentially, blockchain transaction fees. In order to process a transaction on the blockchain, blockchain miners must expend certain amount of computational power to verify and validate the transaction. Because all NFT transactions are recorded on the blockchain, this includes each transaction to mint, buy or transfer an NFT. Gas fees are paid to compensate blockchain miners for the "energy" spent processing these transactions. On the Ethereum blockchain, one of the most popular blockchains and the one where Otherdeed NFTs are processed, gas fees are paid to blockchain miners regardless of whether an attempted transaction is successfully recorded on the blockchain. This means that even those who try, but fail, to mint an NFT are on the hook to pay significant amounts of money in gas fees (although in the case of Otherdeeds, Yuga Labs has agreed to refund all gas fees associated with failed transactions).
The cost of gas fees varies widely from one transaction to the next and is determined by supply and demand: the higher the demand on the blockchain at the time of a particular transaction, the higher the gas fee will be for that transaction. The demand for Yuga Lab's Otherdeed NFTs was so high on April 30th when they launched that it caused Etherscan, a website that tracks activity on the Ethereum blockchain, to crash. Conversely, demand has been so reduced over the past few days that the cost of Ethereum gas fees has reached a 10-month low .
Clearly, gas fees associated with NFT transactions are not only potentially incredibly (and prohibitively) expensive, but unpredictable. Luckily for NFT enthusiasts turned off by the high cost of gas fees, several marketplaces and other platforms have launched promising low and even no-gas fee transactions.
Although it doesn't boast zero gas fee transactions, Polygon enables users to buy and mint NFTs at (typically) lower cost gas fees than they would pay on the Ethereum blockchain. Polygon is a "layer 2" or "sidechain" scaling solution that runs alongside the Ethereum blockchain. This technology enables users to buy and mint NFTs at a lower cost than other platforms, but also allows transactions to be processed more quickly.
Mintable, an NFT marketplace recently announced that gas free NFT minting is available to users through its new product, Mintology. Billed as the "world's first gasless minting API" (Application Programming Interface), Mintology offers a range of tools and services with which businesses can launch NFTs without incurring gas fees. Instead of paying costly and unpredictably gas fees, those wishing to mint NFTs through Mintology can choose between pay-as-you-go pricing (around $2 per mint) or subscription plans (around $1 per mint).
Kraken, a cryptocurrency exchange, announced in early May that a waitlist is now open for its soon-to-be-launched NFT marketplace, Kraken NFT, which boasts zero gas fees for sales and transfers within the Kraken platform among other features. Notably, users will still pay gas fees when transferring NFTs onto or off of Kraken's platform; however, all transactions processed on Kraken's platform will be free of gas fees.
ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.