NFT Gas Fees and Efforts to Reduce These Expensive and Unpredictable Costs | Ingram Yuzek Gainen Carroll & Bertolotti, LLP

Yuga Labs, creators of the multimillion-dollar Bored Apes Yacht Collection NFTs, made high-priced headlines again earlier this month when it was reported that buyers of their latest NFT venture, virtual plots of land known as Otherdeeds (for use in their soon-to-launch metaverse game, Otherside) paid gas fees more than five times the price of the NFTs they purchased. Apparently, a buyer paid the exorbitant sum of $44,000 in gas costs for his Otherdeed NFT purchase. While buyers of Yuga Labs NFTs may have paid some of the most exorbitant gas fees reported recently, they are far from the only ones facing high gas fees. So what are gas charges, why are they so expensive, and what, if anything, is being done to curb them?

Gas fees are basically blockchain transaction fees. In order to process a transaction on the blockchain, blockchain miners must expend some computing power to verify and validate the transaction. Since all NFT transactions are recorded on the blockchain, this includes every transaction to mint, buy or transfer an NFT. Gas fees are paid to compensate blockchain miners for the “energy” expended to process these transactions. On the Ethereum blockchain, one of the most popular blockchains and where Otherdeed NFTs are processed, gas fees are paid to blockchain miners whether or not an attempted transaction is successfully recorded on the blockchain. This means that even those who try, but fail, to hit an NFT are required to pay significant sums in gas fees (although in the case of Otherdeeds, Yuga Labs has agreed to refund all gas fees associated with transactions failed).

The cost of gas fees varies widely from transaction to transaction and is determined by supply and demand: the higher the demand on the blockchain at the time of a particular transaction, the higher the gas fee will be for this transaction. Demand for Yuga Lab’s Otherdeed NFTs was so high on April 30 when they were launched that it caused Etherscan, a website that tracks activity on the Ethereum blockchain, to crash. Conversely, demand has been reduced so much over the past few days that the cost of Ethereum gas fees hit a 10-month low.

Obviously, the gas fees associated with NFT transactions are not only potentially incredibly (and prohibitively) expensive, but unpredictable. Luckily for NFT enthusiasts discouraged by the high cost of gas fees, several marketplaces and other platforms have launched promising transactions at low and even no gas fees.

Polygon

Although it does not offer transactions without gas fees, Polygon allows users to buy and mint NFTs at (usually) lower gas fees than they would pay on the Ethereum blockchain. Polygon is a “layer 2” or “sidechain” scaling solution that works alongside the Ethereum blockchain. This technology allows users to buy and mint NFTs at a lower cost than other platforms, but also allows transactions to be processed faster.

Mintology

Mintable, an NFT marketplace recently announced gasless NFT typing is available to users through its new product, Mintology. Billed as the “world’s first gasless typing API” (Application Programming Interface), Mintology offers a range of tools and services with which companies can launch NFTs without incurring gas fees. Instead of paying expensive and unpredictable gas fees, those wishing to mint NFTs through Mintology can choose between pay-as-you-go pricing (about $2 per mint) or subscription plans (about $1 per mint) .

Kraken NFT

Kraken, a cryptocurrency exchange, announced in early May that a waiting list was now open for its soon-to-be-launched NFT marketplace, Kraken NFT, which among other things offers zero gas fees for sales and transfers. within the Kraken platform. Notably, users will still pay gas fees when transferring NFTs in or out of Kraken’s platform; however, all transactions processed on Kraken’s platform will be free of gas fees.

To stay up to date with developments regarding NFTs, follow the NFT newsroom.

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