The gas fee debate: are they helping or hindering new NFT drops?
NFTs, non-fungible tokens, had a heady 2021 with trading in the uniquely accessible digital assets spiking 21,000% according to CNBC with more than US$17 billion being spent.
But with that popularity came "gas wars" where the gas fees -fees paid to transact on the Ethereum blockchain - started to rise exponentially as large numbers of traders competed to get their hands on a specific NFT.
Gas prices fluctuate, depending on the complexity of a transaction and traffic on the network. Naturally, a transaction requiring more computational power will demand higher fees. Also, transacting during peak periods with plenty of traffic on the Ethereum network will attract heftier fees.
So why not do away with gas fees altogether?
Fawzi Gabr, CEO and one of the founders of NFT Elemento Dragons, says they were concerned about inflated gas fees with the launch of their offering. Created by a team of blockchain developers, programmers, animators, and graphic designers, Elemento Dragons was a prime candidate for a gas war as it features the iconic dragons from HBO's blockbuster series Game of Thrones; Drogon, Rhaegal, and Viserion.
The NFT project is a collection of 8,888 uniquely random collectible NFTs, gaming, community Digital Asset Organization (DAO), and animated series. But the team never thought of trying to avoid gas fees.
"Gas fees have always been a barrier to owning NFTs but that is not a bad thing," says Gabr. "Gas fees allow you to secure the project from "quick flippers" who seek only to take a quick profit. Paying a substantial gas fee means that an NFT is worth holding on to. That keeps the pirates out of the market and that is the way Elemento Dragons looks at gas fees."
Besides Gabr says that the smarter the investor, the easier it is to reduce gas fees.
"We had a few investors paying as low as $4 per transaction on gas fees," he says. "It all depends on how professional the team is and how they create their smart contracts. At Elemento dragons, we believe gas fees are a positive deterrent. There are a lot of scammers out there that will copy your project and launch it. But because of gas fees, they'll have to choose another blockchain to avoid paying gas. So GAS is a protector that we should embrace and not want to remove."
The change that Gabr and other NFT creators would support is taking the chance out of what gas fees cost. "If anything we would hope for a fixed price on the gas fees," he adds.
Elemento Dragons' Discord has over 20,000 members and over 17,000 followers on Twitter, with these figures growing daily. These digital dragons are tipped for rapid growth in the second half of 2022 but they also want to give back to the NFT community.
But Gabr warns newcomers to the NFT market to avoid the trans or believing everything they read when it comes to numbers and looks beyond simple online engagements.
"Don't look at volume or numbers," he says. "All these get faked, projects now buy likes/retweets and they hire "hype" members to make discord look busy. Instead, look at the project as a whole, look at the founding team, are they doxxed? Is the road map achievable or too good to be true? Does the team have the experience to pull the project through? Is the art inspired and has a story behind it? These questions are the ones that need to be answered."