As a curious crypto enthusiast, knowing that certain days and times are more favorable for sending transactions through the Ethereum network is essential knowledge for your portfolio and its balance. This reality may have you wondering when the ideal time is to buy, trade, and send transactions on Ethereum and how you can reduce your gas fees. In this piece, we will answer some of these questions in order to assist you in making smarter trading choices within the Ethereum ecosystem.

Key Takeaways

• The cost of gas is influenced by the Ethereum price and how busy the network is.
• Ethereum gas fees are charges you must pay for using the Ethereum Blockchain.
• Gas prices change predictably based on the day of the week and the time of day.
• Transactions that are not urgent or can be scheduled (such as deposits and withdrawals), are better done or carried out during less busy periods.
• Most transactions on the Ethereum blockchain are synchronized with the time zone of the American East Coast.

What are Ethereum Gas Fees?

When you use the Ethereum blockchain for transactions, you may encounter Ethereum gas fees, which are charges the blockchain imposes. These transactions could involve exchanging cryptocurrencies between wallets or trading NFTs. Gas fees are applied to the transaction whenever something is transferred on the Ethereum blockchain.

The amount of this fee can vary greatly, ranging from less than USD 0.0001 to over USD 100. This charge depends on the specific blockchain you are using and the current demand for block space. On Ethereum, the required fee to use the network is called the gas fee (or gas price). 

How Ethereum Gas Fees Work

Every time Ethereum processes transactions using the Ethereum blockchain, it applies a variable Ethereum gas fee. The following factors determine this fee:

• Base Fee: The gas fee fluctuates based on the level of demand on the blockchain. When demand is high, the gas fee increases; when it’s low, the fee decreases. Ethereum sets the base fee according to the demand on the blockchain.
• Gas Units: Gas units, also called limits, are determined by the amount you’re willing to pay for each transaction. Certain transactions require more gas units than others.
• Tips: If you want your transactions to be processed faster, you can add tips to the gas fee.

Ethereum gas fees operate on an auction-like system. When demand is high, transactions become more expensive. Moreover, those who offer higher tips and gas units are prioritized for faster transaction processing.

When are the Ethereum Gas Fees the Lowest?

To enjoy the most affordable gas fees, it’s essential to identify specific days and periods when the network experiences fewer transactions. Each country has its own peak activity hours. By studying them carefully, you can quickly determine the time slots with the lowest gas fees for your transactions.

The busiest and most expensive times are typically weekdays from 5:30 PM to 10:30 PM (IST), when the United States and Europe are fully active during working hours. On weekdays, the lowest ETH gas prices are from 9:30 AM to 1:30 PM (IST), when most of America is asleep and Europe is just beginning its day. If you’re looking for the best time to conduct an ETH transaction, Sundays from 6 AM to 8 AM (IST) offer the lowest ETH gas prices.

It’s worth noting that gas fees depend on the ETH price and the network congestion level. Therefore, it’s essential to consider the price movement of ETH and the overall network activity before proceeding with your transactions.

The Intraweek Seasonality Impact on Gas Prices

One true fact about crypto trade is that most transactions occur in the United States, Europe, and Asia. In the past, Saturdays and Sundays have shown lower gas rates since only some people work on weekends. As a result, transaction costs during weekends can be as much as half of those observed on busy trading days in the middle of the week.

What Caused the First Major Spike in Gas Prices?

Ethereum was the first blockchain to introduce Smart Contracts, which enabled developers to create decentralized applications popularly known as “dApps”. As more dApps were built on the blockchain, the network became congested, leading to higher gas prices. In the summer of 2020, ETH gas prices surged more than 20 times, with DeFi playing a significant role in this increase.

NFT Inflation Caused Another Surge in Gas Prices

An NFT, short for “Non-Fungible Token”, is a unique digital token registered on the blockchain that can only have one owner. Nowadays, NFTs can represent various digital assets like artwork, tweets, or other forms of content. Anyone can create an NFT by minting it on the blockchain, although this process involves a fee. Specialized NFT platforms guide how to mint, buy, and sell NFTs. 

In 2017, the popular CryptoKitties dApp was launched, causing congestion on the Ethereum network due to high activity. This increased gas fees from 0.002 ETH to 0.008 ETH to participate in the game, significantly slowing down the Ethereum platform as it reached a record number of transactions. Today, NFTs are receiving more attention than ever before. Still, the increased popularity has led to a surge in gas prices. As a result, investors are seeking ways to minimize the cost of paying gas fees.

What are Gas Fees Used for?

Gas is the currency used to pay for computational resources on the Ethereum blockchain. It’s needed for tasks like sending ETH, creating and purchasing NFTs, and utilizing smart contracts and dApps built on Ethereum. The amount of gas required for these operations is vital for the network, which you should consider before initiating a transaction on it. Gas fees vary depending on the specific task, and it has been observed that sending a primary ETH transaction is usually cheaper, while executing complex smart contracts and dApps can be more expensive.

Who Gets the Gas Fees?

Gas fees are payments that go to individuals who contribute to the support and security of the Ethereum network. In Ethereum’s execution layer, previously called Ethereum 1.0, these fees are rewarded to Proof-of-Work (PoW) miners operating on the Ethereum protocol, and in Ethereum’s consensus layer, formerly referred to as “Ethernet 2.0, gas fees are distributed to those who stake their ETH to support the updated Proof-of-Stake (PoS) version of Ethereum.

What is the Ethereum Gas Limit?

The maximum limit for an Ethereum gas fee is set at 21,000 gas units. This means that users can stay within this limit for certain transactions. For example, the gas units will not exceed 21,000 if you send Ether to someone. When executing a transaction, you can set any gas fee. If you set a fee higher than the limit, the Ethereum Virtual Machine (EVM) will refund the excess amount.

However, if you allocate less than the limit, there is a risk that the miners may not pick up your transaction. In such cases, there is a possibility of losing your ETH. To better understand this, let’s say you allocate only 20,000 units to send ETH. The system will attempt to use those 20,000 units. Still, it will eventually fail, resulting in a loss of Ether worth 20,000 units.

Strategies to Reduce Gas Costs

Even though sharding and Layer-2 solutions might lower gas fees in the future, it’s crucial to understand what steps you can take as an Ethereum user. Here are a few strategies to significantly reduce expenses when utilizing the Ethereum blockchain.

Utilize a Layer-2 Solution

Since 2017, Ethereum has consistently faced the issue of high gas prices. To address this problem, several layer two solutions have emerged. These solutions aim to relieve some of the transaction burdens on the Ethereum main chain by diverting them to a separate network. Once the transactions are processed on this independent network, the results are finalized on the Ethereum main chain.

These layer two solutions come in various forms and functions. Still, many popular ones have undergone rigorous testing and can significantly reduce users’ gas costs. Currently, the most widely adopted universal layer-2 solutions for Ethereum include Polygon, Arbitrum, and Optimism. According to data from L2Fees, these solutions can reduce fees by over 90% when transferring tokens and slightly less when transferring ETH.

Choose the Right Moment

While the Ethereum network is usually bustling with activity, there are times when it’s less crowded. Think of it like a busy walkway that occasionally clears up. By utilizing online tools, you can predict the periods of the day when Ethereum transactions are less frequent. If you’re not in a rush and can time your actions accordingly, you have the potential to reduce your gas fees by as much as 50%.

Simulate the Transaction

To lower gas prices, knowing the actual costs is essential. Online tools like Tenderly, DeFI Saver, and similar platforms enable users to simulate crypto transactions. This simulation serves two purposes: identifying and addressing potential issues and clearly understanding the transaction’s cost based on specific parameters. These tools allow you to gain insights into anticipated expenses and make informed decisions to reduce gas fees.

Use Ethereum’s Storage Refund

To alleviate congestion on the Ethereum network, Ethereum provides storage refunds when specific data is deleted. This process helps free up space and reduce the burden on the network. GasToken is an example of a tool that assists users in tokenizing the stored gas, enabling them to optimize their gas usage on the Ethereum network.

Use Applications That Reduce Costs

There are now various dApps available that aim to assist you in minimizing transaction costs on the Ethereum network. For instance, Rook helps by grouping transactions and reducing fees. Likewise, utilizing Balancer’s crypto vault can significantly lower gas fees. Other dApps in the crypto space also provide discounts or subsidies to help users save on transaction expenses.

Learn to Predict Network Congestion

Although it may not be ideal, it can be essential to strategize and select the optimal time for processing your transaction. Network congestion occurs when the blockchain is heavily utilized, which can cause delays and higher fees. To mitigate this, staying informed about the latest news and developments that could significantly increase the demand for Ethereum is crucial. By staying aware and making informed decisions, you can increase the likelihood of smoother and more cost-effective transactions.

Bundle Transactions When Possible

Gas fees differ depending on the nature of transactions, and it’s important to note that you’ll be charged gas fees for each trade you make. That’s why, whenever feasible, it’s recommended to consolidate your ETH coins into a single address. This can be done when transferring ETH from multiple crypto wallets to the same dApp. By grouping your ETH into one address, you can save on gas fees and streamline your transactions.

Consider a Layer-1 Alternative

Ethereum continues to hold its position in the cryptocurrency ecosystem. Still, new blockchain networks have emerged in recent years, offering significantly lower transaction fees and faster processing capabilities. For instance, the Solana network charges approximately $0.00025 per transaction, making it a cost-effective option. Alternatives like Cardano, NEAR Protocol, and Binance Smart Chain are also worth considering. These networks provide choices for users seeking lower fees and improved transaction speeds.

Gas Wars Role in Ethereum Gas Fees

In the blockchain sector, battles are known as gas wars, because they resemble conflicts over limited resources like land or precious metals. These gas wars occur periodically and contribute to the overall seasonality of the crypto market, causing significant price fluctuations.

During a gas war, participants compete to secure space in the next block through a “Priority Gas Auction” (PGA). They do this by paying higher gas fees than the network average, aiming to gain a better position. Winners of gas wars often pay several times the average transaction price to secure their desired spot. Gas wars typically arise during highly sought-after events with limited availability, such as initial DEX offerings (IDOs) and non-fungible tokens (NFTs), with more participants than available slots, or when the network is congested.

To ensure their transactions are processed, users must pay higher gas fees to secure a winning position in the next block. However, these positions are also susceptible to frontrunners looking to exploit the situation for quick arbitrage profits.

Final Thoughts on When Ethereum Gas Fees are the Lowest

Before using the Ethereum network, it’s crucial to know the concept of ETH gas fees. If you don’t pay attention to them, they can be pretty costly. While there are methods to mitigate these high fees, they require learning and patience. Users have high hopes for future Ethereum upgrades that may lower gas fees. However, the exact timing of these upgrades remains uncertain, and we must make do with the current situation.