Will Gas Fees Torpedo Ethereum?

Just a few years ago, we were all reading articles about how crypto would crash and everyone that has any kind of coin would be left holding the bag. General crypto sentiment has since done a complete 180, with everyone trying to get in on the action, especially as fiat currencies show their susceptibility to inflation. However, there are still dangers lurking behind even the biggest cryptocurrencies. One of these dangers is hidden in Ethereum, whose gas prices might prove to be too much for punters.

Gas Fees: The Basics

Depositing with Ethereum and wagering the deposited funds has been how many punters have wagered for years now. However, a gas fee can turn a pleasant roll of the dice into an irritating loss when it comes time to withdraw, especially if you pick the wrong time to do so.

Gas fees are sums that are paid in ETH to validators that take care of on-chain interactions, which in this case can be deposits, wagers, win settlements, and withdrawals. A gas fee is a simple multiplication of the current gas price and the gas amount required for a transaction to be validated. The actual gas prices fluctuate based on demand, with spikes occurring during rush hour.

While these gas fees might not seem like a lot, a transaction can accumulate an average cost of anywhere from $0.4 to $0.5, making small bets on penny slots especially vulnerable. If you are a punter who wagers $1 per spin, losing half a dollar to gas fees stings, especially if it happens multiple times.

Small Bets: The Math

Let us look at an everyday example and evaluate the overhead. If an online casino has every wager routed through Ethereum's transaction tracking, the associated fees can be crushing. A simple wager of $1 has, if we take the average Ethereum L1 transaction fee, a gas fee of $0.44, so 44% of the wager. A $5 bet has an 8.8% transaction fee, and a $10 bet has a 4.4% fee. Things get considerably better at $100, where the fee is only 0.44%, but that is outside the playstyle of small wagers.

However, this major handicap is being effectively addressed by Ethereum upgrades, which are especially focusing on cutting data costs for Layer-2s. Various upgrades have diminished L2 transaction fees to mere cent or sub-cent levels, with proto-danksharding massively reducing L2 costs.

L2: Ethereum’s Savoir?

One could, in the wake of Layer-2s, argue that Ethereum has been saved from the crushing weight of gas fees. Analysts and trackers, after all, show that L2 TVL and activity are growing significantly, with fees being just cents or even fractions of a cent. While L1 still erodes small bets, the ecosystem that has developed around L2 or hybrid flows is saving Ethereum from being completely sidestepped by low-wager punters. But that does not mean that you should not take action and help keep your funds safe from pointless fees.

Practical Workarounds

We want you to have a clear plan of action when it comes to reducing your Ethereum and other crypto gas fee costs. Some of our main pointers, both for punters and casino operators, are:

• Low-fee Alternatives: Consider opting for chains that accept small bets with minimal fees, such as BNB Chain.
• Use Hybrid Models: Make all user logic off-chain, which makes it free, and only settle net positions on-chain. A lot can be achieved in this regard by off-chain ledgers and periodic aggregated transfers.
• Consider Stablecoin Channels: Some casinos accept stablecoins and simply bridge net flows on-chain when the time is right. If done in batches and infrequently, it can greatly reduce gas costs.
• Gas Sponsorships: Look for an online casino, especially from our reviewed online crypto casinos, with a gas “sponsorship” above a set threshold. The venue will take care of the fee if you take care to deposit more than the threshold.

A New Age for Crypto Casinos

While we have been evaluating Ethereum and talking about how we can circumvent gas fees, we have forgotten about what the current age is bringing to crypto. As the entire world, and even some governments, transition to accepting crypto as a payment option equivalent to fiat currencies, we are stepping into a world of more efficient crypto solutions.

The current situation is very similar to crossing the Atlantic. Two centuries ago, it was an incredibly expensive journey, which only got slightly cheaper with mass seafaring, and eventually highly affordable with commercial airlines. While cutting down the costs of travelling the Atlantic took centuries, it is taking mere years for crypto to optimize itself. We can, without a shadow of a doubt, expect the crypto casinos of tomorrow to have every concern of today figured out.

We will guide you through this incredible journey and keep you informed on the latest and most obscure crypto developments. Moreover, we will keep showcasing exceptional casinos and reviewing them as objectively as possible, so that you have nothing but the best gaming experiences. Join our newsletter, follow our insights, and above all else, have fun.