Blockchain networks, in their decentralized glory, are not managed by a specific company or individual. Network Fees, also known as 'Gas', are the fees paid to anonymous agents - miners and stakers - who make transactions possible.
↕️ Fluctuating Nature of Network Fees
Just as not all journeys are the same, not all transactions demand the same amount of work. Therefore, network fees, which incentivize miners and stakers to execute these tasks, naturally vary. This fluctuation in network fees depends on the nature of the transaction and the volume of pending transactions on the blockchain at a given time. Consequently, the same transaction could cost different network fees at different times, especially when transaction volumes are high or the operations are more urgent and complex.
The network fees for a transaction are always paid in the native coin of the network where the transaction is happening: ETH for Ethereum, MATIC for Polygon, AVAX for Avalanche, and so forth. If you're short of the necessary coin, you have the option to swap some of your other coins or purchase more from an exchange.
🧮 Identifying the Network Fee for a Transaction
Most cryptocurrency wallets, including the Zelus wallet, provide the network fee cost for a transaction before you confirm it. Zelus wallet goes a step further, offering a brief explanation of what network fees are, aiding those who are new to the concept.
🤨 The Absence of Network Fees in Centralized Exchanges
Many centralized exchanges, such as Binance or Coinbase, operate in a manner similar to a bank. Given that they hold full custody of your funds, they opt for 'off-chain' bookkeeping instead of actually transferring cryptocurrency to or from your blockchain address. Simply put, since the crypto isn't moving, no network fee is incurred. However, users do pay a 'trading fee' to the exchange for each transaction, and a 'withdrawal fee' when they transfer any funds from the exchange into their personal crypto wallet.
📊 Monitoring Network Fees
If you wish to navigate the fluctuating landscape of network (gas) fees efficiently, keeping an eye on their current status can be quite helpful. Several online services, such as Etherscan and EthGasStation for Ethereum or Polygonscan for Polygon, offer real-time information on the current network prices on their respective networks. These platforms provide details about the 'low', 'average', and 'high' network prices, allowing users to decide when to initiate a transaction.