NFTs are so dang hot now! It provides unique ownership of various items that can range from music to art and even properties. Nevertheless, it is a relatively new enterprise, so it is crucial to understand its mechanisms.
Besides the cost of the actual NFT, certain logistical fees must be provided when you buy or create an NFT. This is where gas fees come in. However, ways to avoid them have also been developed, and they can be of help to many.
Creating NFTs can be fun as well as profitable if you know the right ways to do it without being intimidated. Read on to find more on how to transfer your NFTs without having to pay gas fees.
What are NFTs?
NFTs or non-fungible tokens provide an opportunity for everyone to purchase (even with credit cards) and own unique creations for their personal collections. They are not physical properties but conveniently exist in a digital space. And they are selling for high prices! Therefore, it can be profitable for artists and creators as well.
NFT transactions take place in a digital marketplace. Therefore, there is a massive volume of NFT transactions taking place as well.
They work just like physical properties but with less hassle and cannot be interchanged. Therefore, you can now boast about owning the best collectibles in the easiest of ways.
Differences Between Gas Fees, Transaction Fees and Royalty Fees
The different fees associated with NFTs can be confusing, so I figure we should get that cleared up right out of the gate:
- Gas Fee: according to Ethereum, “…each Ethereum transaction requires computational resources to execute, each transaction requires a fee. Gas refers to the fee required to conduct a transaction on Ethereum successfully.” Basically, anytime you mint, sell or tranfer an NFT built on Ethereum you will be charged a fee that goes to a miner, not an NFT martketplace.
- Transcation Fee: these are fees associated with the sale or transfer of an NFT. These fees go to the NFT platform or marketplace you are transacting on. These marketplaces need to make money somehow to keep the lights on and that how. On two popular platforms OpenSea and Rarible the fees are 2.5% (sibject to change). Each platform is slightly different.
- Royatly and Commission Fees: these are fees which make NFT creating interesting for the artists and creators. Usually NFT creators can set a royalty fee between certain parameters and embed it into the smart contract. Every time their NFT sells in the secondary market they make that royalty amount.
The Deep Dive on Gas Fees
Although making and purchasing NFTs might seem like the cheapest thing in the world because it’s all digital, unfortunately, it is not.
Why, you may ask? Well, this is because creators and buyers are required to pay a fee called gas fees whenever there is a transaction involving the particular NFT.
It is not a new concept, though. Just like there are fees such as studio fees or shop rent for creators in the real world, it is also present in the NFT marketplace. It is based on resources utilized in a virtual and digital space and their corresponding physical costs like manpower and electricity.
The gas fees associated with a certain NFT are paid to data miners. They undertake several tasks when you want to create or buy an NFT, like scourge the extensive digital verse to find whether the NFT is genuinely unique.
This is done by going through an enormous amount of data. It is also essential to go through this to ensure that the source provided for the NFT is all correct.
After the ownership transfer is complete, it must also be registered on the blockchain, with all the necessary safety checks in place.
Like this, there are several steps to creating and buying an NFT that must be followed for a secure transaction. However, although all of this takes place in a virtual world, it utilizes a very physical component: electricity.
Since a tremendous amount of computing goes into the process, electricity is utilized, which is evidenced in this article: How Much Energy does it Take to Make an NFT?
Increasingly, there is more activity in the NFT marketplace as well. So, several cycles of these processes co-occur, leading to more power utilization.
Therefore, with more demand, the gas fees to be paid while transferring the ownership of an NFT also rises. Of course, everyone would want to participate in this enterprise, so the demand for rapid and more data mining is also increasing.
Factors Affecting the Rise in Gas Price
Besides the basic fact that more engagement of data miners will lead to the rise in gas fees, there are several other associated factors that can influence the increase in gas prices for NFTs. Knowing this will help you plan your NFT purchase efficiently.
1. Busy and Popular Days
There are certain days of the week when the NFT marketplace is bustling. It is best to avoid such days for the transfer of NFT as it might cost you more.
Contrary to popular belief, it is not always on weekends but is often in the middle of the week that the crowd seems to be particularly active, making the gas fees go up.
So make sure to keep an eye out for any changes in trends. Currently, Thursday is considered a busy day for the marketplace.
Moreover, you can also choose strategic timings to make your purchases. Usually, it has been seen that early in the morning works better than late at night (USA, Atlantic Time Frames).
2. Multiple Purchases
Your excitement over exploring the world of NFTs is understandable. However, it would be best if you took it slow and steady. Not only will it help you pace your purchases, but it will also help you pay fewer gas fees!
The more you purchase, the busier your data miners will be. Subsequently, the gas prices might rise, and you will have to pay for multiple purchases on top of that. Therefore, it may make sense to take it slow.
How to Transfer Your NFTs Without Paying Gas Fees: Stop Playing with Ethereum
The simplest way to do this is by using the Polygon blockchain (other lesser-known blockchains allow for gas-free transactions and minting too). It is a secure blockchain that is currently present on the NFT marketplace Opensea. This blockchain does not take any gas fees from its creators, and it is paid by the marketplace on behalf of the artist.
As a creator, you can also mint (create) and sell NFTs using Ethereum without paying any gas fees on Rarible and Opensea through a process called Lazy Minting. It is explained a little further below.
Ethereum is still the most popular and dominant blockchain in the market when it comes to NFTs and uses a Proof of Work system, which is why gas fees are needed.
Nevertheless, it is important to consider other factors as well before moving to a new blockchain with no gas fees, such as how compatible they are with other dependent services, with other wallets, and the potential market cap that they can provide because with Ethereum, the market is, in general, much more extensive.
If you need that “how-to” guide on transferring NFTs check this one out: How to Transfer Ownership of an NFT.
Transfer NFTs Without Gas Fees Using OpenSea
One can also transfer NFTs using OpenSea on the Polygon network between two accounts. This only works for Polygon-based NFTs and not Ethereum based.
There is a gas fee that is incurred, but it is usually nominal and covered by OpenSea themselves as a token of appreciation for using the platform.
- Log in to your OpenSea account and select the NFT that you want to sell
- Click on the “Transfer” option
- Enter the correct wallet address that you would like to send the NFT to
- Click on “Transfer”
Although earlier, one could avoid gas fees with Ethereum based NFTs on OpenSea with a private listing sale and transfer of the NFT however, that feature is no longer available. OpenSea charges gas fees for private listings too.
How to Create NFTs Without Paying Gas Fees?
Everyone would like to avoid the extra fees while creating their art and NFTs. Although it might seem impossible, there are ways! With lazy minting, you can create NFTs without paying a gas fee.
When you Lazy Mint an NFT, you defer the gas fees to the buyer at the time of purchase, but the NFT doesn’t get minted until it is bought either. A cryptographic signature is made during lazy minting, and it is based on the creator’s private key of their corresponding blockchain account. This cannot and must not be duplicated and is the key to accessing the final NFT as well.
A particular pocket of data is assigned a cryptographic signature, making it an encrypted voucher. This voucher ultimately translates into an NFT when the transfer is complete.
The new owner must have a verifiable account on the blockchain, especially one that is allowed to mint NFTs if they are to take the lazy minting route.
Just like how real-life vouchers are redeemed after you make a purchase, these encrypted ones are done as well. Once the buyer has purchased the particular voucher, they can operate a “redeem” function.
On providing the valid signature, they will be able to access the contents of the voucher, which usually contains the NFT.
In lazy minting, the gas fee is calculated right at the moment of the purchase of the NFT. Then, it is consolidated with the cost during the transaction made by the new buyer of the NFT.
Lazy minting is essentially a way for creators to have less burden of paying the gas fees all by themselves. Instead, they can defer it till their sale of the particular NFT is done. While creating an NFT is easy, computing and putting it on a secure blockchain certainly costs the creator and artist money. You can currently do this on Rarible and Opensea.
For an in-depth guide, check out “How To Mint an NFT for Free | Rarible Style.”
Ways to Lower Gas Prices
Here are some different ways to deal with the gas prices on your NFT transactions. These will help you carry out transactions with lower gas fees but not completely eliminate them.
Participate in Less Crowded Blockchains
Ethereum might be one of the biggest and most popular blockchains, but this also makes it crowded all the time. As we have already seen, a crowded marketplace can lead to more gas fees being implemented.
Even secure blockchains implement lazy minting or do not charge gas fees. Therefore, you can choose some less famous but secure blockchain for your NFT interests. Here are a few that come to mind that I spoke of above:
Create a Gas Limit
Having a gas limit is a great way to stop yourself from going overboard. When you have a fixed gas limit, you can only carry out a transaction if the NFT you desire can be transferred within that limit.
Make sure to set a gas limit that you can almost immediately pay. Since gas fees tend to fluctuate, waiting around can put you at a disadvantage if the gas fees increase. Therefore, make sure to take an informed decision rather than simply going with the flow.
Use Layer 2 or Sidechains
Ethereum might be the most used and popular blockchain right now, but it also has limitations. Moreover, it also requires high gas fees due to its popularity.
To avoid these limitations, one can go to layer 2 or side chains developed on the Ethereum network itself, but without the considerable traffic at Ethereum and minus other associated problems.
In these sidechains, the security and otherwise mechanisms of Ethereum are still present. However, since they are considerably less popular than Ethereum, there are possibilities of paying lesser gas fees than on the main chain.
Monitor your Blockchain
One of the best methods to avoid paying high gas fees is by monitoring the blockchain of your choice for the best times to have a transfer. Of course, there are different popularity scales for other blockchains, but the gas fees inevitably tend to rise and fall everywhere.
Therefore, you can always lookout for a time when there is less demand and fewer gas fees. The better you know the blockchain and NFT market you want to participate in, the more advantageous it will be.
It is high time that the problem of rising gas fees in NFT transactions and even minting is addressed. While it makes sense to pay data miners for the hard work they have to do, it is also crucial to find a sustainable method now that the popularity of NFTs is rising.
Too many expenses spent behind gas fees can even slow down the marketplace at large by deterring people.
The downside of rising gas fees is that it might reduce the possibilities of more artists and owners participating in the NFT marketplace. So to ensure that such outcomes do not hinder the NFT marketplace at large, an effective solution must be found.
Always make an informed decision regarding all factors that go into the transaction of your NFT to find the most effective solutions for your benefit. And speaking of being informed, these three trendy articles will be of great use to your NFT journey:
- How To Buy NFTs When They Drop in 3 Steps
- 9 Things to Do With NFTs After Buying Them
- How Long Do NFTs Take to Transfer? Info Per Platform