So-called gas fees can be a major headache for crypto users, with spikes in network activity forcing them to pay extreme sums to ensure their transactions are processed. It’s a problem that the crypto industry desperately needs to address if digital assets are to become a standard payment mechanism, as it simply won’t do when someone is forced to pay $20 in fees for a $3 cup of coffee.
Fortunately, a new breed of “smart” crypto wallets such as Ambire Wallet have created a great little solution to the problem of expensive gas fees, enabling users to pre-pay these transaction costs and ensure they’ll never be charged over the odds.
Stupidly Expensive
At present, gas fees on the Ethereum network cost around 49 gwei (1 gwei is the smallest denomination in ETH, with 1,000,000,000 gwei = 1 ETH). That works out at around $4.70 at the current rate. While that’s not going to be a problem for someone swapping thousands of dollars’ worth of ETH tokens on an exchange, it’s a ridiculous amount to pay for those who are transacting smaller amounts.
Every smart contract blockchain has its own formula for calculating gas fees. In the case of Ethereum, the most popular smart contract chain, the exact cost of its gas fees fluctuates based on network activity. When the network is slow, gas fees will be relatively low, but during times of network congestion, the fees can shoot up to astonishing amounts.
The Ethereum Foundation has published an article explaining how gas fees are calculated, and suffice to say, they do become very expensive at times of increased network activity. For instance, there have been times when crypto traders have paid a staggering 43% in gas fees, such as when one trader stumped up 64.01 ETH in fees to send 148 ETH. That works out at about $224,000 in transaction costs at the current market rate.
These kinds of crazy gas fees are surprisingly common, especially when highly anticipated events such as major NFT drops occur. For instance, when the Bored Ape Yacht Club creator Yuga Labs debuted its Otherdeed NFT collection, it sold out for $320 million. But the demand was so high that users collectively spent almost $180 million in gas fees to ensure their transaction went through and they could claim their coveted NFT.
Prepaying Gas Fees
This is why the ability to pay for gas fees in advance could be a gamechanger for many crypto users. Ambire Wallet is one of a new generation of smart crypto wallets that enables users to pre-pay their gas fees ahead of time, guaranteeing that they won’t be forced to pay exorbitant fees during times of high demand.
Ambire Wallet’s “Gas Tank” can be compared to the discounted rates offered to consumers by streaming service provides like Netflix, which charge lower than the monthly rate if the user pays for a yearly subscription up front. With the Gas Tank, users can deposit their gas fees ahead of time, paying in either ETH, MATIC or various stablecoins. In doing this, users can save up to 5,000 gwei on Ethereum transactions and 20,000 gwei when using other ERC20 blockchains.
The Gas Tank takes advantage of something called the “Relayer”, which is a backend service that broadcasts transactions to blockchain validators. The Relayer was originally designed as a gas fee abstraction mechanism that enables users to pay their gas fees in any token, rather than just ETH.
Using the Gas Tank, Ambire Wallet can make a single deposit to the Relayer’s address in order to obtain “credit” that can be used to pay the gas for multiple transactions, rather than paying for each single transaction. By effectively pre-paying their gas fees, users can secure a much lower price.
Why Do This?
There are several reasons why prepaying gas fees is a smart idea, especially for those who regularly perform crypto transactions. The main reason is that users can plan their budgets better. If someone knows in advance that they need to make a certain amount of transactions each month, for example, they can deposit their gas fees for that entire month earlier, so they will know exactly what their transaction costs will be. They can then plan their budgets accordingly.
By paying ahead of time, users can also secure a much lower rate in case the network happens to be congested at the exact moment they need to perform a transaction. This makes sense because network spikes can be unpredictable. After all, lots of crypto users don’t pay any attention to what hot NFT drops are just around the corner, so they won’t realize that gas prices are set to spike just as they’re planning to buy their groceries using a crypto credit card, for example.
While everyone else will have to choose between paying hundreds of dollars in fees or delaying their transaction until the network calms down, Ambire Wallet users can go right ahead and complete their transaction, without worrying about the fee.
Saver-style crypto users will also get a sense of proactive gratification thanks to the Gas Tank’s Cashback feature. Each time the user requests a transaction, they’ll see an estimated fee that’s based on the gas rate at the time the transaction is made. But because they have paid in advance, the user will often be charged much less gas than this estimate. The difference is then returned to the user.
Final Thoughts
While features such as the ability to set your own gas limits have helped users to avoid paying expensive rates, they can’t really be considered as a solution since all they do is stop the transaction from being processed. But there are times when users cannot afford to wait. By prepaying your gas fees ahead of time, you will no longer have to.
