Whether you like it or not, fees are an integral part of the blockchain ecosystem. They are the incentive to the miners and validators to add transactions to the blockchain. Without fees, there would be no blocks. Without blocks, no blockchain.
Depending on market forces and network activity, fees can fluctuate wildly between very affordable to extremely outrageous. Ethereum, one of the most popular and largest blockchains is notorious for its widely fluctuating transaction fees, also known as gas fees.
Before we get into how to save money on transaction fees, let’s take a look at what they are and how they work.
Transaction fees act as an incentivize/reward for the miners and validators who process the transactions and add them to the block. It is a pay-for-processing system that basically helps keep the network safe from spam attacks. Bad actors are less likely when they have to pay to interact on the blockchain.
READ MORE: Transaction Fees on the Blockchain Explained
Transaction fees are directly related to the size of the transaction being broadcast and the traffic on the network.
The more data involved in a transaction, the more complex and therefore, the higher the fees. For example, a simple crypto for crypto transaction will cost much less than executing a smart contract on Ethereum. Smart contracts require more computational power so will naturally cost more to process.
When there are more users sending transactions to the blockchain, the network can get congested and everything slows down. To speed things up, users can attach higher fees to their transactions as a way to entice miners to validate them first.
This basically starts a bidding war, pushing the transaction fees up as users compete for the miner’s attention.
Transaction fees may be unavoidable, but there is a way for companies and web 3 developers to reduce these fees and make their dApps more attractive to a wider audience.
Crypto APIs’ full product suite provides everything you need to operate and scale high-quality apps in the most affordable and efficient way. Our blockchain solutions, tools, and unified endpoints have been designed to not only make integrating your business with the blockchain easier, but to make it cheaper.
Here’s how you can save on your blockchain infrastructure development and operational costs with Crypto APIs.
Our Wallet as a Service uses MPC which stands for Multi-Party Computation, a cryptography technology used for private key management. With MPC, there is no private key, instead the signature is derived from separate key shares that are independently generated on non-connected devices... hence the name, Multi-Party Computation.
This process is done completely off-chain, with only the final signature being broadcast on-chain. Not only is this a super secure key management system, but it’s data light, with no additional data added to the transaction.
A transaction signed with MPC appears to blockchain miners and validators as a simple standard transaction. There are no extra fees or gas required to process it, resulting in lower transaction costs and a reduction in network congestion.
This means companies can use our WaaS to consolidate funds much more efficiently and save up to 90% off transaction network fees.
Constantly paying higher fees means less profit while submitting transactions with overly low fees can mean long delays or failed transactions that end up “stuck”. Both scenarios can deter users from transacting via your application.
Providing accurate gas price guidance means giving your users greater control and allowing them a competitive edge in the mempool for an overall positive transaction experience.
You don’t have to spend all your engineering efforts monitoring the mempool. With Crypto APIs Blockchain Data, you can make use of our Get Fee Recommendations endpoint which is based on mempool data. Calculations are done in real time and provide higher accuracy than fees based on already mined blocks. Using this endpoint, you can receive recommendations on the gas price for Ethereum fees per byte for Bitcoin, and more.
Crypto APIs Blockchain Automations make life easier with Automatic Coins Forwarding or Automatic Tokens Forwarding to automatically forward any received funds to the main address you have set. Of course, it’s impossible to know exactly when funds will be received and transferred, and with fees frequently changing, you can't set an exact fee.
But what you can do is set the priority of your automations: slow, standard, or fast and we will take care of it. Again, the fee calculations are based on mempool data.
You can also set a minimum amount to be collected before forwarding. This can save you some fees as we will not forward any amount automatically. Our system will wait and will only forward the funds as a single transaction once the minimum amount is collected.
As well as the above examples, Crypto APIs have other ways to reduce your business’ transactions costs on the blockchain.
Estimate Transaction Smart Fee: Through this endpoint, customers can estimate the approximate fee per kilobyte needed for a transaction to begin confirmation.
Estimate Gas Limit: This endpoint from our Blockchain Tools helps customers in estimating the gas limit needed for a transaction. It gives information for gas expenses when sending ether to contracts or making a transaction with additional data in it.
Crypto APIs are about more than saving money on blockchain transaction fees.
We offer business, SME and organizations the ability to implement blockchain infrastructure and securely scale their operations at a much greater pace while saving on development and operational costs.
Our quantum secure WaaS, instant access to live and historical blockchain data, webhooks, automations, and powerful and unified endpoints allows them to offer their customers a frictionless way to interact with cryptocurrency and digital assets across multiple blockchains.
To find out more about how our blockchain product suite can save on developmental costs, contact the Crypto APIs team today.