<span style="font-weight: 400">The Ethereum [ETH] network was one of the first crypto projects to enter the financial market. It became a foundation project upon which other projects could build on. However, scalability issues and high gas prices made it difficult for the network to expand. After receiving a lot of negative feedback about the issues above, the developers decided to create a Layer-2 solution for them. Even though Layer-2 transactions are much easier and less expensive, the network's co-founder intends to reduce the transaction fee further.</span>

<img class="aligncenter" src="https://ethereum.org/static/aea37731b69ef20e24d7de8f873b940d/95e90/hero.png" alt="Layer-2 " width="540" height="358" />
<h2><b>What Are Layer-2 Solutions?</b></h2>
<span style="font-weight: 400">The Layer-2 solution's design aims to aid application growth by taking some of the transaction processing work off of the</span><a href="https://ethereum.org/en/enterprise/"> <span style="font-weight: 400">Ethereum Mainnet</span></a><span style="font-weight: 400"> (layer 1) while keeping the same level of security and decentralization as the mainnet. As a result, Layer 2 solutions improve transaction speed while lowering gas costs.</span><a href="https://www.cryptoknowmics.com/news/immutable-x-layer-2-technology-for-nft-market"> <span style="font-weight: 400">Immutable X</span></a><span style="font-weight: 400">, Polygon, and</span><a href="https://www.cryptoknowmics.com/news/wanchain-deploys-new-bridges-connecting-moonbeam-moonriver-polkadot-and-wanchain"> <span style="font-weight: 400">Polkadot</span></a><span style="font-weight: 400"> are common Ethereum Layer-2 solutions.</span>
<h2><b>Why Are Layer-2 Solutions Important?</b></h2>
<span style="font-weight: 400">Layer-2 solutions are important because they enable scalability without jeopardizing the integrity of the Ethereum blockchain. This enables total decentralization, transparency, and security while lowering the carbon footprints (less gas means less energy used, which equates to less carbon.)</span>

<span style="font-weight: 400"> Even though the Ethereum blockchain is the most popular and, in some ways, the safest, it still has some flaws. On the Ethereum Mainnet, transactions take a lot of time (13 seconds) to process. Apart from this, it also requires a lot of gas fees. Layer-2 solutions are built on top of the Ethereum blockchain to ensure transaction security, speed, and scalability.</span>

<span style="font-weight: 400"> Each solution has advantages and disadvantages, such as gas fees, security, scalability, and, of course, its performance. Unfortunately, there is currently no single Layer-2 solution that meets all of these requirements. Rollups are a type of Layer-2 scaling solution that aims to improve all of these things.</span>
<h2><b>Lower Gas Fees with Ethereum’s Proto-Danksharding?</b></h2>
<a href="https://notes.ethereum.org/@vbuterin/proto_danksharding_faq"><span style="font-weight: 400">Proto-Danksharding</span></a><span style="font-weight: 400"> is a relatively new type of sharding concept. According to Vitalik Buterin, founder of Ethereum, this protocol could help reduce transaction fees to less than five cents. It would also handle blob-carrying transactions.</span>

<span style="font-weight: 400">This transaction contains an additional 125KB of data (blob) that the Ethereum Virtual Machine cannot access (EVM). This will allow the network to expand rapidly while reducing traffic and competition for gas use. As a result, gas fees would drop.</span>
<h2><b>Is It Acceptable?</b></h2>
<span style="font-weight: 400">For the time being, this Ethereum improvement proposal, also known as EIP-4844, may hold the key to making transactions cheaper. The host of the podcast Bankless, Ryan Sean Adams, recently informed his Twitter followers that Ethereum was no longer expensive. </span>

<span style="font-weight: 400">In response to the same Twitter thread, Ethereum's co-founder stated that the transaction fee should be less than $0.05 to be considered acceptable. Therefore, the general public would consider it acceptable as long as it is below this price.</span>
<h2><b>What Next?</b></h2>
<span style="font-weight: 400">Even though Ethereum's roadmap is flexible, the upgrade of the shard chain is scheduled for 2023. This will occur following the</span><a href="https://ethereum.org/en/upgrades/merge/#:~:text=Eventually%20the%20current%20Ethereum%20Mainnet,roll%20out%20of%20shard%20chains."> <span style="font-weight: 400">merger of the Mainnet and the Beacon Chain</span></a><span style="font-weight: 400">.</span>

<span style="font-weight: 400">Shard chains enable data to be stored cheaply and horizontally across a network. This distributes the load and reduces the time to complete a transaction. This will greatly benefit both Ethereum and Layer-2s.</span>
<h2><b>How are Gas Fees Determined?</b></h2>
<span style="font-weight: 400">The demand and supply of computational power of miners determine gas fees. For example, if there is a high demand for Ethereum transactions, miners will request more gas to complete the task. On the other hand, if the miner lacks sufficient computing power, they may be willing to accept lower gas fees.</span>

<span style="font-weight: 400">Miners can refuse to process a transaction if they disagree with the user's gas limit ( the maximum amount of gas fees that the user is willing to pay for the transaction)</span>

<span style="font-weight: 400"> The Ethereum transaction fee is in three parts:</span>
<ul>
 	<li style="font-weight: 400"><span style="font-weight: 400">Base Fee: The base fee is the smallest amount users need to complete a transaction.</span></li>
</ul>
<ul>
 	<li style="font-weight: 400"><span style="font-weight: 400">Gas Limit: The gas limit is the smallest amount of money a user is willing to pay for a transaction. The user has the option of changing this amount.</span></li>
</ul>
<ul>
 	<li style="font-weight: 400"><span style="font-weight: 400">Tip fee: Users pay a tip to miners to move their transactions to the top of the list.</span></li>
</ul>
<h2><b>Why Are Gas Fees High?</b></h2>
<span style="font-weight: 400">There are two major reasons why gas fees are always high:</span>
<h3><b>Ethereum's Popularity </b></h3>
<span style="font-weight: 400">According to experts, the value of Ethereum will increase by 400% by 2022. Many different types of decentralized applications (DApps), such as games and supply chain solutions and decentralized finance (DeFi) platforms, use Ethereum. The price of gas fees rises as Ethereum's popularity grows. Miners need more computer power to keep up as more people use the blockchain platform, so they prioritize transactions with a higher gas fee limit.</span>
<h3><b>Ethereum Numerous Applications</b></h3>
<span style="font-weight: 400">Entrepreneurs and startups enjoy using Ethereum for finance or advertising, supply chain management, health care, trading non-fungible tokens (NFTs), and raising capital. </span>

<span style="font-weight: 400">Ethereum is also useful for a variety of businesses. For example, in the music industry, it aids artists in keeping track of their royalties by automating the payment of those royalties via tokens. Its numerous applications increase its popularity, which raises the gas fees.</span>
<h2><b>How Can You Avoid Paying Gas Fees?</b></h2>
<span style="font-weight: 400">Here are four methods for reducing the amount of gas fess you spend on Ethereum.</span>
<ol>
 	<li style="font-weight: 400"><span style="font-weight: 400">Use Ethereum at a non-peak time, such as on weekends. There is less demand for computing resources when fewer people use a computer. Gas prices will fall as a result of this.</span></li>
 	<li style="font-weight: 400"><span style="font-weight: 400">Reduce the size of your tip. If your transaction does not require immediate completion, do not rush. Instead, be patient and allow it to happen when it is ready.</span></li>
 	<li style="font-weight: 400"><span style="font-weight: 400">Use Layer-2 scaling solutions such as</span><a href="https://www.cryptoknowmics.com/news/arbitrums-nft-trading-market-treasure-dao-faces-vulnerabilities"> <span style="font-weight: 400">Arbitrum</span></a><span style="font-weight: 400">. Layer 2 transactions take place outside the blockchain platform, saving computing power and gas fees. Ethereum then validates the transactions.</span></li>
</ol>
<span style="font-weight: 400">Use DApps that offer discounts, refunds, or money to assist you. For example, some DApps, such as</span><a href="https://balancer.fi/"> <span style="font-weight: 400">Balancer</span></a><span style="font-weight: 400">, refund up to 90% of your gas fees!</span>

Does Layer-2 Transaction Fee Need to Be Below $0.05 To Be Acceptable?

Even though Layer-2 transactions are much easier and less expensive, the network's co-founder intends to reduce the transaction fee further

Oluwademilade Afolabi is a freelance writer and editor passionate about blockchain technology and the health industry. He is a 6th year medical student, and has worked with various companies and blogs since the blockchain revolution began.

Does Layer-2 Transaction Fee Need to Be Below $0.05 To Be Acceptable?

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