The current gas climate for the Ethereum Network has left me speechless. Over the course of the past year, I spent more money on transaction fees than rent. It has gotten to the point where I started to look into two different things:
- Which chains provide much cheaper gas fees, but still offer good trading/investing opportunities.
- How can I significantly reduce my transaction fees on the Ethereum Network, if at all.
I found my answer to both questions. Those who follow me actively know I’ve been investing into Binance Smart Chain altcoins for the past couple of months. The Binance Smart Chain is Ethereum compatible and offers <$0.1 transaction fees on transfers.
This means it’s incredibly interesting for projects to move over to the BSC as it provides various solutions, while requiring minimal efforts to switch. The BSC has flipped the Ethereum Network last week in the amount of transactions per day.
However, I’m also aware there’s still plenty of opportunities / gems to be found on the Ethereum Network. Therefore, I started looking into options to reduce the gas fees when using decentralized exchanges. The solution isn’t perfect, but still reduces gas fees by about 20%.
How can I reduce my gas fees when using Uniswap, 1INCH, etc.?
It’s funny, but ETH doesn’t conform to its own ERC-20 standard. ETH was built before the ERC-20 standard existed which causes some issues.
wETH is a ‘wrapped’ version of ETH and is built on the Ethereum Network, using the ERC-20 standard. The ERC-20 standard defines how tokens are transferred and how a record of these transfers is kept in the network.
Decentralized platforms use smart contracts to enable users to trade directly between each other. Without relying on any middleman. wETH enables you to directly trade ETH for ERC-20 tokens, which reduces one step in the smart contract and therefore the transaction fees.
wETH is pegged at a 1:1 rate to ETH and can be swapped on any decentralized exchange or on wETH.io. Transaction fees would still be paid in ETH, so make sure you also keep a little bit of ETH in your wallet and don’t swap everything.
Here is an example of me trying to swap UNI tokens to ETH, versus swapping UNI tokens to wETH:
The results: Save 14.1% in fees simply by using wETH!
This might not seem like ‘much’ initially. However, considering many traders spend thousands of dollars / year on transaction fees, this adds up a lot!
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