Zero-Fee Transactions Are Boosting Blockchain’s Appeal

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As an analyst with years of experience in the blockchain industry, I can confidently say that the issue of high transaction fees has been one of the most persistent challenges in the adoption of cryptocurrencies. The exorbitant gas fees on Ethereum and Bitcoin networks have often made them virtually unusable for regular consumers, which is a significant setback for the entire ecosystem. However, it’s heartening to see that the industry has been proactive in addressing this issue.

In periods of intense network traffic, the cost for blockchain transactions can skyrocket. Before Ethereum switched from Proof-of-Work to Proof-of-Stake, gas fees on its network frequently reached astronomical heights, forcing users to pay hundreds of dollars just to have their transactions handled within a reasonable timeframe.

In the past, the Bitcoin network has faced comparable problems, most notably during the peak of Ordinals mania when transaction fees surged above $300. Such exorbitant fees are detrimental for both businesses and individual users, making crypto networks nearly inaccessible and tarnishing their image. Given that people worldwide would likely prefer to use traditional currency rather than crypto if they must pay over $50 in fees for a simple cup of coffee, the high transaction costs significantly harm the reputation of these digital currencies.

Fortunately, it’s been acknowledged within the rapidly evolving blockchain sector that excessive gas fees have become an issue due to scaling beyond their capacity. Notably, Ethereum has shown significant advancements in this regard, with a recent upgrade named “The Merge” contributing to its scalability and effectively eliminating gas fees over $50. Additionally, the growth of Layer-2 networks has been beneficial. These networks group transactions together, process them off-chain, and execute them as a single, larger transaction. This sharing of fee costs among multiple transactions helps to make transactions more affordable.

Additionally, we’ve noticed the rise of blockchain systems such as IOTA and Nano, specifically designed to offer low transaction fees.

In the realm of blockchain technology, particularly for DeFi users and traders, affordable transaction costs have emerged as a significant factor setting platforms apart. These groups frequently execute hundreds of transactions daily, and the appeal lies in the fact that lesser fees mean more cryptocurrency remaining in your wallet by day’s end.

No-Fee & Low-Fee Blockchains

As a dedicated researcher, I’ve been on a mission to find ways to cut down on blockchain transaction fees. This pursuit has led me to the development of several networks that offer the exciting prospect of completely fee-free transactions.

Among these well-known platforms, one standout is Nano, appreciated for its distinctive structure that makes it an appealing option for microtransactions. It offers the advantage of zero fees and immediate transaction processing, which makes it an ideal pick for users frequently making small payments. However, since it’s less commonly used, its market cap is relatively low at $109 million.

Another free-to-spend cryptocurrency is IOTA, which is a network that’s geared towards “internet of things” economies. It utilizes a special consensus mechanism known as the Tangle, and is designed to enable machine-to-machine transactions at zero costs. IOTA makes sense because if small devices like sensors are going to use blockchain to communicate with one another, such a system has to be extremely cost-effective. But although IOTA is designed to scale, it still has a long way to go with a limited market cap of just over $400 million. 

As a researcher exploring the realm of blockchain technology, I must admit that both Nano and IOTA, despite their low market caps, are yet to fully accommodate the masses and facilitate a world of affordable transactions. However, there’s good news! The Solana network, renowned for its high-performance, offers an alternative worth considering. This network boasts a vast ecosystem of DeFi applications and is recognized as one of the most economical blockchains available today, with an average transaction fee of merely $0.0025.

One widely-used, affordable alternative is Dogecoin, often referred to as the globe’s beloved “meme coin.” Originally created as a joke, it has since gained prominence and is now frequently utilized for microtransactions, tips, donations, and even as a payment method for Tesla customers. On average, users of Dogecoin incur approximately 0.0025 dollars in fees per transaction, adding to its attractiveness beyond its lasting meme charm.

We should also give a shout to Litecoin, which has long stood in the shadow of Bitcoin despite always insisting that it’s actually far superior to the world’s foremost cryptocurrency. Litecoin might not match the value of BTC, and it quite possibly never will, but when it comes to transaction costs it wins hands-down with its average fee of just $0.02. 

Abstracting Away The Gas

Affordable and free transaction costs could draw users towards a blockchain network, yet other strategies might turn out to be even more appealing.

In simpler terms, when compared to Ethereum, the EOS network is considered a rival and boasts superior performance and speed. However, one less-discussed aspect of EOS is its unique gas fee structure. Just like other networks, users must pay to interact with the EOS blockchain; however, unlike many others, fees are not charged transaction by transaction. Instead, users can choose to prepay their fees based on anticipated usage by staking EOS tokens. This method results in a cost advantage as it ensures lower transaction costs.

For users, this implies they’ll hold more EOS tokens in their wallet, while simultaneously avoiding the hassle of paying transaction fees. The standout feature of EOS’s system, though, is that developers can use their staked EOS tokens to cover their users’ fees. By depositing EOS into a smart contract linked with their dApp, developers can market their apps as having no fees or transaction costs. This could be a significant advantage for certain types of dApps, like decentralized exchange platforms or lending and borrowing protocols, where the accumulated transaction fees can become substantial over time.

No More Headaches For Users

Among networks such as Bitcoin and Ethereum, the EOS model stands out as a clear winner due to its superior flexibility when it comes to managing user assets. It streamlines the transaction process by making it easier to handle.

One of the most irritating things about the Ethereum blockchain is the need to pay fees, especially for new users who may not always realize this. For instance, if a user wants to swap all of their ETH for an alternative asset, such as USDC, they can’t actually do this, as they’ll need to set aside a small amount of ETH to cover the gas costs of that transaction. They’ll also need to continue to maintain an ETH balance afterwards, for any future USDC transactions they make will also accrue gas fees that must be paid in ETH. 

As an analyst, I find that on the EOS blockchain, I no longer have to worry about managing my EOS balance for transaction fees. Instead, I can pre-stake a portion of my EOS to cover these costs for extended periods, such as six months or a year, depending on my choice. This means I’m free from the hassle of constantly monitoring and adjusting my EOS balance for daily transactions. Moreover, if the dApps I engage with leverage the feature of paying gas fees on behalf of users, the system becomes more appealing and user-friendly, making it easier for me to navigate.

A Gas-Free Future?

With numerous blockchains actively seeking methods to lower their transaction fees almost to zero, it’s expected that this could significantly boost cryptocurrency adoption. This is because high gas fees have consistently been a major pain point, particularly among novice users who may not fully grasp the inner workings of blockchain transaction processes.

By eliminating gas fees, blockchains minimize the hassle involved in day-to-day transactions and reduce the chances of the user having a nasty surprise, where they discover their transaction cannot be processed due to a lack of gas. 

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2024-11-11 12:26