Smart Tips and Tricks: Save Money on Ethereum Gas.
Updated: Apr 2, 2021
Do you remember the 2017 ICO cryptocurrency boom and the massive bull market that came along with it?
It was an excellent time to be alive; you could quickly turn a mere thousand dollars to millions. We all felt as if we had captured lightning in a bottle. Spoiler alert: it all came tumbling down in 2018, and most cryptocurrencies lost as much as 90%.
Let's forget the doom and gloom of 2018 and focus on the present for a minute. If you are a newbie in crypto, you don't have to worry either because, just like in 2017, the bull market is here with us again; this time, it is fueled by non-other than our very own beloved DeFi. Prices are exploding all over the place, be it in DeFi lending, borrowing, yield farming, derivatives, Insurance, and NFTs (non-fungible tokens).
All this activity on the ethereum blockchain has driven the gas prices very high, almost to the point of bringing the whole ecosystem to a halt.
With big bull runs comes huge gas prices!
What is gas price and how does it affect your transactions? A gas price is the amount of money you are willing to pay to have your transactions processed by miners on the blockchain.
Since the ethereum gas fee is based on an auction model when the network is highly congested, the more you are willing to pay, the faster your transaction will be.
You can check the current ethereum gas prices here.
Will Ethereum ever scale?
The word on the street is Vitalik Buterin has assembled an army of skilled developers at Ethereum Foundation. They are rumored to be spending sleepless nights living on coffee and pizza trying to fix this scalability problem on the Ethereum blockchain. Sooner or later, a brand new ETH 2.0 will emerge and solve all our gas problems.
At least this has been the narrative for the last two years, and we all have our fingers crossed as we wait for our Savior Vitalik to get us out of this nightmare. But wait a minute, all jokes aside, what can we do until then? Unlike the stock market, crypto trading never stops. It's 24/7 365. We desperately need a quick fix to this.
Are there any solutions to these humongous gas prices? I hope we don't go broke before ETH 2 launch.
Luckily we have been testing a few tricks at DeFi Analytica, which have not only saved us a lot of money on gas fees but also earned us some handsome gains speculating on gas prices, and we can't wait to share them with you.
Wrap it up
Before I give you my tips and tricks, which I have been guarding for a while, let me ask you a quick question. How do you like your Ether, wrapped or unwrapped? It's a tricky question to answer but first, let's look at the main difference. The answer is going to surprise you.
We are all familiar with the good old ETH, which we have all grown to love and hate simultaneously. Ethereum is the native token on the ethereum blockchain.
When we create decentralized Apps on Ethereum or make tokens like AAVE, SNX, UNI, etc., we call them the ERC20 tokens. Before WETH (wrapped Ethereum), there was ETH which means ETH was the proto token of the ethereum blockchain.
ETH came before the ERC20 token standard; therefore, it doesn't "play nice" with other tokens. What does this mean? All tokens on Ethereum, including WETH, comply with the erc20 token standard except ETH.
Therefore since birds of the same feather flock together, it's easier and cheaper to trade between the same erc20 token standard tokens.
When you swap tokens on a decentralized exchange like uniswap, your ETH will have to be converted to WETH then to the token you are swapping. let me give you an example, let's say you have ETH, and you want to convert it to SNX; behind the scenes, your transaction will be divided into three steps .convert ETH to WETH, then SNX
Using WETH saves you 32-50% in gas.
ETH ==>WETH ==> SNX
On the other hand, if you have WETH, you will have only one transaction since they are of the same ERC20 token standard.
The more transactions you have, the more expensive it is.
Where can you get WETH(wrapped Ether)?
You can convert your ETH to WETH on any DEX or CEX, for example, Uniswap. ETH and WETH are usually on a ratio of 1:1, meaning you will get the same dollar value for each.
2. CHI GAS TOKEN
The Chi gas token is a creation of the leading DEX aggregator 1Inch. Naming the decentralized exchange 1inch was inspired by Bruce Lee's legendary 1inch punch. Bruce Lee has nothing to do with saving money on Ethereum gas. What saves you money is the Chi gas token.
The Chi gas token takes advantage of the ethereum gas refund system. It is merely a tokenized version of the actual gas price on Ethereum. You can get Chi by minting the token directly from a 1inch exchange.
If the gas goes up, so does the value of the Chi token.
Once you mint your Chi token, you can store it in your wallet, for example, Metamask, Trust Wallet, Ledger, or whichever wallet you use to connect to dexes. Then allow one 1 inch to use Chi. The rest of the magic works behind the scenes.
Using the Chi gas token can save you up to 50% in gas fees.
Please note that using the Chi gas token to save up to 50% in gas fees can only be done on 1inch DEX or any other Dapp that allows the use of Chi. For best results, always mint or buy Chi gas token when the gas prices are low.
3.ETHEREUM LAYER 2 DECENTRALIZED EXCHANGES
Layer 2 decentralized exchanges are exchanges that operate by removing transaction from the main ethereum chain (layer1) and handling the transactions off-chain (Layer 2)
Why do we need layer 2 solutions?
When the Ethereum network is busy and congested during high transaction periods, the gas prices get very high due to senders trying to outbid each other to have the fastest transactions.
Handling these transactions off the main chain eases these problems and brings fast and very cheap transactions.
4.THE BINANCE SMART CHAIN ✴️
All the solutions mentioned above are just bandaid remedies as we wait for the much anticipated ETH 2 launch. Due to uncertainties on launch day, many traders and developers have no other option but to move to alternative blockchains which offer cheaper and more efficient transactions. If you are tired of waiting for ETH 2, you can pack your crypto bags and move to Binance smart chain.
Binance Smart Chain is an Ethereum Virtual Machine-compatible blockchain with a Proof of Staked Authority consensus mechanism.
By using EVM makes it easy for users migrating from ethereum based DEXs like uniswap. Most of the dexes on BSC are also forks of uniswap. You will definitely feel right at home on the Binance smart chain.
One of the blockchains that have proved to be cheap, fast, and reliable is the Binance Smart chain(BSC) developed by the famous centralized exchange binance. The fees are soo cheap on the Binance chain that
"once you go Binace SC you cant go back."
You can find the whole list of projects on Binance Smart Chain here.
This article is a work in progress; please share the tips and tricks you have been using to save on ethereum gas, and we will be happy to include them in the list.