2024 Ethereum Transaction Costs: Gas Fees Guide for NFT and Token Transfers

Ethereum, in terms of market capitalization, ranks second after Bitcoin and provides a robust blockchain infrastructure for decentralized applications and smart contracts. However, the biggest challenge faced by Ethereum users is the gas fees required for each transaction on the network. Controlling and optimizing transaction costs is especially critical during NFT transactions and token transfers.

Fundamentals of Gas Fees: Understanding Transaction Costs

Every transaction on the Ethereum network has a cost. This cost is measured in “gas” units paid for computational resources. The gas concept represents the energy cost needed for the machine to perform the transaction.

The more complex the transaction, the higher the amount of gas consumed. For example:

• Simple ETH transfer: 21,000 gas units
• NFT purchase: 150,000+ gas units
• Token swap: 80,000-120,000 gas units

Gas fees consist of two main components:

1. Gas Price (gwei): The amount you pay per gas unit
2. Gas Limit: The maximum amount of gas you are willing to spend on the transaction

Total transaction cost = Gas Limit × Gas Price

Currently, Ethereum (ETH) price hovers around $2.92K, while gas prices fluctuate between 20 and 200 gwei depending on network congestion.

EIP-1559: Revolutionary Change in Gas Fee System

In 2021, the Ethereum London Hard Fork update fundamentally changed the gas fee model. The EIP-1559 mechanism replaced the entirely auction-based system with an automatic pricing model.

In this new system:

• Base Fee: Adjusts automatically based on network demand and is burned (destroyed)
• Priority Fee (Tip): An additional amount paid by users to prioritize their transaction

As a result, gas fees became more predictable compared to before. However, during periods of high demand, such as NFT booms or memecoin surges, prices can spike rapidly.

Gas Costs by Transaction Type

Different transaction types on the Ethereum network carry varying costs:

Simple ETH Transfer

• Required Gas: 21,000 units
• Estimated Cost at 20 gwei: 0.00042 ETH
• This is the least costly transaction type

ERC-20 Token Transfers

• Required Gas: 45,000-65,000 units
• Estimated Cost at 20 gwei: 0.0009-0.0013 ETH
• More costly due to contract interaction

NFT Transactions and Smart Contract Interactions

• Required Gas: 100,000-200,000+ units
• Estimated Cost at 20 gwei: 0.002-0.004+ ETH
• Includes buying, selling, or listing NFTs
• Swapping on DeFi platforms like Uniswap also requires similar gas costs

When the network is congested, these costs can increase tenfold or more. During the peak NFT market in 2023, gas fees reached levels of 200-300 gwei.

Ethereum 2.0 and Dencun Upgrade: Radical Drop in Transaction Fees

The Ethereum ecosystem has implemented multiple upgrades to significantly reduce gas fees.

Contributions of Ethereum 2.0: Transition from Proof of Work to Proof of Stake has increased network capacity. Beacon Chain and The Merge upgrades have made Ethereum more efficient. With full sharding implementation, transaction fees could drop below $0.001.

Dencun Upgrade (EIP-4844): Proto-danksharding technology has increased Ethereum’s transaction throughput from 15 transactions per second to 1,000. This has dramatically lowered costs for Layer-2 solutions. For example:

• Mainnet transactions: $5-10
• Layer-2 transactions (Post-Dencun): $0.01-0.10

Layer-2 Networks: The Most Effective Way to Escape Gas Fees

Layer-2 solutions process transactions off the Ethereum mainnet, significantly reducing gas costs.

Optimistic Rollups (Optimism, Arbitrum):

• Transactions on mainnet costing a few dollars: $0.1-0.5
• Fast and reliable
• Wide application support

ZK-Rollups (zkSync, Loopring):

• Transactions on mainnet costing a few dollars: $0.01-0.05
• Lower costs
• Higher privacy features

Practical Example: Buying an NFT on Loopring network might cost only $0.5 compared to $50 on Ethereum mainnet. This is why active NFT buyers have migrated to Layer-2 platforms.

Tracking Gas Fees and Timing Optimization

Tools are available to make smart decisions when transacting on Ethereum.

Etherscan Gas Tracker: Provides low, average, and high price options. Offers estimates for different transaction types. Analyzing block time charts helps understand network congestion momentum.

Blocknative Estimator: Provides real-time trend analysis to predict when gas prices might drop.

Milk Road Visual Tools: Heatmaps show the most optimal hours for transactions. Generally:

• Weekends have lower gas prices
• Early mornings (UTC) are more efficient
• Off US working hours tend to be cheaper

Strategies to Reduce Gas Costs

Timing Techniques: Schedule transactions during less congested times. Plan non-urgent transfers for weekends. Monitor gas price trends to decide when to wait.

Wallet Optimization: Wallets like MetaMask, Ledger Live allow manual adjustment of gas fees. You can lower the gwei value in advanced settings. Choose wallets that inherently use less gas.

Batch Operations: Perform multiple token transfers via a single smart contract call. This reduces overall gas expenditure. Some DeFi protocols offer this feature as “batch operations.”

Switching to Layer-2: If you frequently transact, join Layer-2 networks. Arbitrum and Optimism facilitate easy migration from Ethereum. zkSync and Loopring offer the most aggressive price optimizations.

Main Factors Affecting Ethereum Gas Fees

Network Demand: High user activity immediately raises gas prices. The popularity of DeFi protocols creates sudden demand surges. During active NFT markets, gas fees can spike unexpectedly.

Transaction Complexity: Simple transfers cost 21,000 gas. Interacting with smart contracts can require 100,000+ gas. Multi-call and data access operations exponentially increase costs.

EIP-1559 Mechanism: Automatic base fee increases have made price shocks more controlled. However, demand spikes can still cause sudden price jumps.

Frequently Asked Questions About Gas Fees

Q: Do I pay gas for failed transactions? A: Yes. Even if a transaction fails, miners have spent computational resources. The network charges for the effort. Double-check transaction parameters to mitigate this risk.

Q: What does “Out of Gas” error mean? A: Your gas limit was insufficient to complete the transaction. Increase the limit when retrying. Research appropriate gas limits for your transaction type beforehand.

Q: How can I estimate gas fees? A: Use tools like Etherscan, Blocknative, and Gas Now. Select suitable gwei values based on current network congestion. If you have time, consider waiting for lower prices.

Q: Why are gas fees so high when buying NFTs? A: NFT transactions require complex smart contract calls. On mainnet, they can need 100,000+ gas. On Layer-2 NFT marketplaces, costs can be reduced by up to 100 times.

Q: How do I switch to Layer-2? A: Add networks like Arbitrum, Optimism to MetaMask (. Use bridge protocols like Stargate, Across ) to transfer assets. Then start using Layer-2 dApps directly.

Conclusion: Managing Transaction Costs on Ethereum

Understanding and managing Ethereum gas fees is an essential skill for active crypto users. With upgrades like EIP-1559, Dencun, and Layer-2 solutions, the system is gradually becoming more efficient.

Today, you should:

• Wait for low gas periods
• Use Layer-2 solutions
• Time NFT and DeFi transactions carefully
• Avoid unnecessary transactions

Following these strategies allows you to continue using the Ethereum network at a lower cost.