Ethereum is used heavily across the crypto space which involves sending Ethereum from one exchange or wallet to another place, which incurs a fee. In this article, we will explore how much it costs to send Ethereum, why Ethereum has a transaction fee, who pays it, and whether the Ethereum transaction fee can be lowered.
How Much Is It To Send Ethereum?
The Ethereum transaction fee varies depending on the cryptocurrency exchange, crypto wallet, and network congestion. According to YCharts, the average fee to transfer Ethereum on the blockchain is 0.5101 USD at the time of writing, with the lowest fees between 9:30 AM to 1:30 PM (IST). The other cost associated is additional exchange withdrawal fees. Binance charges the lowest transaction of 0.000768ETH, however, some exchanges such as Bitstamp charge up to 0.006 ETH per transaction.
Why Does Ethereum Have Transaction Fees?
Ethereum is a Proof-of-Stake (PoS) blockchain network that comprises multiple decentralized applications and crypto assets that have been developed. When sending an ETH transaction, a gas fee is applied to ensure the maintenance and governance of the network. Validators, which are essentially staking pools, are nodes on the network with the purpose of processing and validating transactions within the ecosystem. This task is not free and stakers are compensated for their contribution.
Who Pays The Ethereum Transaction Fees?
The Ethereum transaction fee is paid by those who are transacting Ethereum. In other words, it is paid by the one who owns Ethereum and wants to transfer it from one account to the next. Ethereum transaction fee is not always consistent since it depends upon the network congestion and the number of users involved.
Furthermore, the minimum withdrawal amounts of different cryptocurrency exchanges also impact Ethereum’s transaction fee. For instance, at the time of writing, Binance charges the lowest Ethereum Transaction fee of 0.000758 ETH, and Coindeal charges the highest fee of 0.015ETH.
What is the Lowest Ethereum Transaction Fee?
Binance charges the lowest fee for transferring Ethereum at the time of writing. The cost to send Ethers via the Binance Smart Chain (BSC) has a charge of 0.000062 ETH per transaction. However, if an individual uses the native Ethereum network (ETH), the fee increases to 0.000768 ETH. In the case of the BNB Beacon Chain, the Ethereum Transaction Fee is quite low at 0.0001 ETH. For those wanting the cheapest way to send Ethereum, the fee on the Optimism network is zero. The table below shows the ETH transaction fee based on the top crypto exchanges we have reviewed.
|Crypto Exchange||Ethereum Transaction fee|
|Binance||0.000062 ETH (BEP20), 0.000768 ETH (ERC 20), 0 ETH (Arbiter One), 0.0001 ETH (BEP2), 0 ETH (Optimism)|
What is the Maximum Ethereum Transaction Fee?
The most expensive exchange to transfer Ethereum that we could find is Bitstamp, which charges a maximum of 0.006 ETH per withdrawal to an external Ethereum wallet. This is approximately USD 7.62 at the time of writing and should be avoided (or use another blockchain). KuCoin and ByBit are also on the high end when it comes to Ethereum transfer fees at 0.005ETH using the ETH network.
Why Is The Ethereum Transaction Fee So High?
Multiple factors influence the Ethereum transaction fee, including the time it takes to confirm the transactions, network congestion, and the size of one transaction; if any of these issues are aggravated, the ETH transaction fee rises.
- The number of blockchain transactions. If the Ethereum network is busy, ETH transactions get queued. In order to bypass the line, a higher gas fee has to be paid.
- Bear markets. Market volatility, particularly in a bear maker can increase the selling pressure. This can lead to a high number of people withdrawing has increased, which is increasing the Ethereum transaction fee.
- Microtransactions lead to bigger transaction sizes. Crypto accounts with multiple smaller transactions are victims of the compounded effect, where the transaction size becomes bigger, leading to elevated fees.
Can You Lower the Ethereum Transaction Fee?
Yes, there are multiple ways of lowering the Ethereum transaction fee which include choosing the cheapest blockchain network and changing crypto exchange with lower withdrawal fees. Other strategies can be used to reduce the overall costs of the exchange which include taking advantage of exchange promotions and staking.
- Choose a different network with lower fees. The highest fee is incurred when people are transacting on the Ethereum network. However, choosing a network like Optimism will lower the transaction fee to zero.
- Use a different cryptocurrency exchange. Different exchanges have different withdrawal fees. Binance offers one of the lowest transaction fees in the market, whereas platforms such as Bitstamp charge a premium and should be avoided if possible.
Frequently Asked Questions
Yes, some cryptocurrency exchanges allow users to choose the Ethereum transaction fee by selecting the network to use. On Binance, ETH holders can switch between the BNB Smart chain, Ethereum, Arbitrum One, BNB Beacon Chain, and Optimism when withdrawing Ethereum from Binance. Other exchanges do not have the same flexibility and only support the native Ethereum network, which has the highest transaction fees.
Yes, the Ethereum transaction fee can be avoided using the Optimism blockchain. It charges zero ETH per transaction. However, this blockchain network is not widely supported among cryptocurrency exchanges and wallets.
Yes, when an investor is trading Ethereum, the gas fee can be added to the cost basis in the tax reports.
In short, Ethereum has an average transaction fee of 0.5101 USD, which is one of the lowest transaction fees in the market. However, the cost can go higher or lower depending on the network congestion and choice of the trading platform when withdrawal costs are factored in. At the time of writing, the cheapest option available is transacting Ethereum through the Optimism network on Binance which is free.