How to avoid Ethereum’s high Gas Price issue.

Like all cryptocurrencies, Ethereum works based on a blockchain network. A blockchain is a decentralized, distributed public ledger where all transactions are verified and recorded.

It’s distributed in the sense that everyone participating in the Ethereum network holds an identical copy of this ledger, letting them see all past transactions. It’s decentralized in that the network isn’t operated or managed by any centralized entity — instead, it’s managed by all of the distributed ledgers.

Gas considers the computational difficulty, bandwidth, and space needed to calculate the necessary fees to complete each transaction. These fees are what incentivize Ethereum miners to put forth the required work to maintain the network. Gas fees are required to execute a transaction on the Ethereum blockchain network successfully. If you’ve made a transaction on the Ethereum blockchain in the last few months, then you probably have been shocked by the extra price tag tacked on called a gas fee.

Why is the ethereum gas price so high?

Ethereum was designed as a “global cloud computer” that would revolutionize how digital entities interact with each other. Initially, It was launched with plenty of room on the network for transactions (computing operations) that seemed impossible to turn into the expensive one, but it is not the same case today as it is overcrowded. The price of Ethereum’s network token, Ether, has steadily appreciated, while the “gas” amount, the total number of computing units available in each block, has become a scarce resource. Just like the gas and diesel prices in many places at the moment, Ethereum’s “gas” prices have become too expensive in practical reality.

As the most actively used blockchain protocol and thanks to the ever-increasing number of projects in areas such as DeFi, Ethereum is in a state now where it feels like the whole world is trying to squeeze its computing operations into an increasingly problematic bottleneck. There is just enough room on the network for about 20 transactions per second, but the demand is many orders of magnitude higher. This bogs the network down and makes single transactions prohibitively expensive. The cloud computer of the future and standard-bearer for blockchain technology is practically unusable for many.

Reasons to Stick with Ethereum

Before we discuss alternatives, however, it’s worth noting that Ethereum’s popularity as the industry-standard means that they will eventually find a cure for this chronic throughput problem, in which case it might be wise for projects needing the ubiquity and access Ethereum provides to not stray too far from the platform’s protocols. There are already a variety of projects being developed to improve throughput and/or lower transaction costs. One promising method is called “sharding,” a way to make the processing of transactions run in parallel.

Another benefit of using Ethereum is that the community is huge, and blockchain projects need strong support to maintain the protocols, tools, etc. Just recently, a critical bug was found and fixed thanks to this community. Blockchain and cryptocurrencies are ultimately social enterprises so in general the more people that work on a project, the better. All these upgrades and maintenance efforts come for free on Ethereum. This is a huge benefit when compared to other commercial blockchains where you have to pay for this service or private ones where you have to do it yourself.

Picking the right blockchain for your needs

As you know, the high transaction costs and slow speed on the Ethereum blockchain are prohibitive and have even killed off some projects that launched back in the days when transaction costs were a negligible fraction of what they are today. And while it’s true that there have been a few times when transactions were even higher than they are today (September 2021), for some businesses doing thousands of transactions each day, even a $1 transaction fee is just too expensive, especially when you think about applications like micro-transactions. With this in mind, it’s not too surprising that projects are now flocking to alternative chains and, as of today, there are plenty available to choose from that accomplish more or less the same things.

Much like choosing a car, or any other piece of technology for that matter, picking the right blockchain is always about finding the best balance of features and limitations. Each project is going to have specific needs that will make certain blockchains a better fit. but the most common considerations are always privacy, transaction throughput (speed), transaction cost, safety, security, etc. Different chains prioritize different features.

One way to improve throughput is to not share your computing operations with the rest of the world. In that case, you would use a network reserved for a smaller audience, or even run a private chain. When it comes to private chains there are also many possibilities, such as going with a Hybrid Blockchain like XinFin where you can store your data on the public and private chain.

The ideal solution would be to somehow retain the strong community and stability of Ethereum while at the same time not having to pay the enormous gas fees or deal with the bottlenecks. And it just so happens that such a network does exist!

Enter XinFin Hybrid Blockchain

It turns out you actually can have your cake and eat it too by simply copying the Ethereum protocol and launching a separate chain. Xinfin allows you to continue using all the existing popular tools and benefit from all the upgrades and patches for free. From the aspect of security, this only makes sense as XinFin uses a different consensus algorithm than the energy-consuming proof-of-work one (PoW) that’s causing all the environmental backlash to several blockchains at the moment on the Ethereum mainnet.

XinFin’s token XDC supplants the proof-of-work consensus algorithm (popularly linked with mining) with a proof-of-stake consensus algorithm, fundamentally using the concept of “validators”.Validators are special nodes used in the XDPoS consensus algorithm which validate each transaction occurring on the blockchain network. The result of this validation is to finally append the transaction on the blockchain. A transaction may be accepted by the validator or rejected. (Important: There can be multiple validator nodes in each network.)Decisions made by these validator nodes are broadcasted through the network as messages which are signed (attested) using a validated cryptographic public key. Every validator node running XDC protocol in the RCL network is responsible for deciding its Unique Node List (UNL). This list holds information about which regular nodes does the validator care about. To set up a masternode, make sure your XDC protocol running node is publicly identified and has gone through the compliance process. Every Node Holder needs to upload a KYC document and this detail will be visible to the public network.

In the XDPoS blockchain environment, the masternode concept is cardinal to the functioning. A masternode validates each (or segment of the transaction depending upon UNL) transaction and is also responsible for writing the transaction onto the truth ledger: the blockchain. As a consequence, this makes decentralized governance of the network possible.

A public Delegated proof of stake network like XinFin is the next best thing to running on Ethereum and migrating to a XinFinNetwork. It allows you to transact with almost zero gas costs (that means transactions are almost free!),. And XDPoS Network has 2000+ TPS So, XinFin solves both of Ethereum’s biggest issues while maintaining its core protocols.

You can check out the comparison image below and see the difference of the gas fee on both the network.

XinFin Network is also the ideal network for users of our Active Apothe Network, which was designed specifically for companies to develop and test blockchain solutions in a real blockchain environment. Obviously, this would be prohibitively expensive if run on the Ethereum mainnet, and since it would be on a live public blockchain there is less possibility to try things out and make mistakes, without creating a permanent record. XinFin Network, however, can be used “unproductively,” which means that you can experiment to your heart’s content, by testing it on Apothem Network

And do check out the Tatum API docs to integrate into your Dapps https://docs.tatum.io/ and also check out the blog on How to integrate it https://blog.tatum.io/build-global-trade-and-finance-applications-on-the-xdc-network-with-tatum-993e9c75a289

If high transaction costs and low speed have been causing your project headaches or preventing you from using blockchain technology, then get in touch, and talk with the XinFin Governance team to solve your blockchain problems.

If you like my article then please support me by sending XDC as a bounty to my wallet address:xdcc9acb65482ff9f3e05df8e769ef1cfafd41692d2 and give your feedback on other topics you like to cover by me.