Interacting with blockchain and smart contracts always requires you to pay gas or miner fees before they are validated, regardless of the consensus mechanisms.
Before the full-blown adoption of cryptocurrencies in 2020, miner fees were relatively cheaper. However, with the rise in applications and use cases of blockchain technology, the exorbitantly high miner fee is one of the biggest entry barriers to mainstream adoption of the technology.
For blockchain networks like Ethereum and Bitcoin using the Proof of Work consensus mechanism, the miner fee usually changes with the number of transactions being processed on the network.
Unfortunately, Ethereum can only allow 14 transactions per second. Therefore, higher network congestion leads to higher miner fees.
With innovative development resulting from use cases and applications of blockchain like NFTs and Web3 on the rise, it is certain that the issue of scalability and expensive miner fee will hamper their growth significantly.
In this guide, you’ll learn more about miner fees and how to adjust miner fees to your preference on Coinbase wallet.
What is Miner Fee?
The integrity of blockchain technology arises basically from its reliable transaction processing capabilities.
When you execute a transaction on the blockchain, they are sent to validators who are miners. The miner validates the transaction by confirming its authenticity, then ensures the transaction is not duplicated.
Therefore, miner fees are transaction fees a blockchain user must pay before the completion of the transaction on the blockchain. It is used to compensate miners for their work in verifying the transaction.
Blockchain users can only pay gas fees with the native currency of the network they are using. Meanwhile, the price of miner fees is highly volatile, and it mainly depends on two factors.
One of them is a Blockchain’s Block Time which is the time required for a blockchain to generate a new transaction block.
Therefore, the faster a blockchain can generate a new block, the higher the number of transactions that go through. With this, users can enjoy cheaper and faster transaction processing.
Another factor that affects the Miner Fee is the transaction throughput, that is, the number of transactions a single block can process at a time.
For instance, Bitcoin generates a new block every 10 minutes. Meanwhile, each block can hold up to 500 to 4000 transactions.
For Ethereum, another PoW blockchain, block time is 13 seconds, and it can hold only 70 transactions.
On the other hand, Solana, a highly scalable blockchain, has a throughput of 20,000 transactions per block it generates every 0.4 seconds. Therefore, Solana has a relatively lower gas fee.
However, even with the low block time and throughput of Ethereum, it is still the most used and popular blockchain for DeFi use cases like NFTs, smart contracts, web3 and Metaverse.
Adjusting Miner Fee in Coinbase Wallet
Many crypto wallets allow their users to toggle and customize transaction settings and details, including GWEI, Nonce value, and gas limit.
To adjust miner fees in Coinbase wallet, go to transaction settings and select miner fee presets. You can also do this using the manual transaction settings before completing a transaction.
Here’s how to adjust miner fees in the Coinbase wallet:
In your Coinbase wallet, click on Ethereum or any other cryptocurrencies you want to send from the crypto list, and tap SEND.
Indicate the amount of ETH or other crypto assets you want to send and tap NEXT in the lower part of your screen.
On the next page tagged ‘SEND TO,’ enter the recipient’s wallet address.
A new dialogue box containing a summary of your transaction will pop up.
Click on the settings icon in the DETAIL section and choose between SLOW, NORMAL, or FAST transaction speed. You can also review the corresponding miner fee for each speed.
If you’re not satisfied with the preset speeds, click on CUSTOM MANUAL SETTINGS to adjust the max fee and gas limit.
Once you’re done, tap CONFIRM to save your settings.
Finally, tap SEND on the transaction page and complete 2FA verification.
Thanks to the Fee Adjusting Settings in some crypto wallets, users can manually set the desired miner fee. However, it is important to note that miner fees also determine the transaction time.
Therefore, if your gas fee is too low, miners can ignore it in the transaction pool, resulting in transaction delay.
Meanwhile, the Ethereum blockchain has paved the way for the development of several types of solutions for more efficient, faster, and cheaper blockchain transactions.
Layer two solutions are scaling protocols developed on top of the main layer one blockchain like Ethereum. Their main function is to increase throughput and reduce transaction fees.
Layer two solutions include sidechains that are connected to a blockchain network. They can also be rollup technologies that merge multiple transactions into a single roll. Optimistic and Zero-knowledge are the two most used rollups.
Meanwhile, despite years of delay, the Ethereum blockchain is finally scheduled to migrate its consensus mechanism from Proof of Work to Proof of Stake in July/August 2022. Therefore, users will enjoy massive scalability, efficient transactions, and a more secure network.