Becoming an NFTs investor is not easy, but once you master how it works, it won’t be difficult anymore. By saying that, you’ll have to learn and do extra homework to become a pro trader.

Now we’re talking about the fun part, well, the most challenging part to determine if you are a pro sniper or not: Gas Fee setting skill.

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Most creators know that an NFT transaction on the Ethereum network can be expensive. The high cost of the NFT transactions on Ethereum is caused by the gas fee, which increases from time to time.

What is a Gas Fee?

The gas fee is a fee that users must pay to offset the computing energy used by the network, which is required to process a transaction on the Ethereum blockchain. It is similar to processing fees that credit cards may incur to transfer money to various accounts or pay bills.

The critical difference between the processing fee of credit cards with gas fee is that: the amount of fee to be paid is determined by the demand for the traffic (transactions) on the Ethereum network.

Let's deep dive into how to calculate the Etherium gas fee.

Etherium upgraded its core gas-free marketplace in summer 2021; the update, called London, includes Ethereum Improvement Proposal (EIP) 1559, which aims to change the way transaction fees, or “gas fees,” are estimated. The transactions moved from a first-price auction to a hybrid system involving base fees and tips. Before the upgrade, the inner working or formula for calculating the gas fees was more straightforward. But the prices were more unpredictable.

Instead of a single gas price, now you have to pay attention to three different values:

Base fee: is set by the network
Max priority fee: determined by users, it is paid directly to miners
Max fee per Gas: determined by users, the maximin user is willing to pay per unit of Gas to get the transaction into the block.

Base fee

The Ethereum network determines the base fee, and it can be changed depending on the need of the network. The Base Fee targets 50% full blocks and is based upon the contents of the most recent confirmed block. The Base Fee is automatically increased or decreased depending on how entire that new block is. If there was a lot of demand for the preceding block, the base charge might increase by 12.5 percent. It is easier to forecast the fees for the future block because the basic fees can only grow by a maximum of 12.5 percent over the previous block.

Let's take an example:

This image demonstrates the relevances between gas fee depending on the last block

https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5b29b085-c83d-4209-b19f-a8ef32e66b1e_1327x621.png

If the previous block was precisely 50% full, the Base Fee will remain unchanged.
If the last block was more than 0% full but less than 50% full, the Base Fee will decrease by less than 12.5%
If the last block was 0% full – empty – the Base fee will decrease the maximum 12.5% for the next block.
If the last block was more than 50% full but less than 100% full, the Base Fee would increase by less than 12.5%.
If the last block were 100% full, it Base Fee would increase by the maximum of 12.5% for the next block.

This new upgrade is intended to help smooth transaction fees and avoid unexpected surges. It is automatic and readable directly from the network.

Priority fee

Priority fee is often called the miner tip. The additional fee that the user paid directly to miners encourages them to incorporate the user’s transaction in a block. This is optional; however, at the moment, most network participants estimate that transactions generally require a minimum 2.0 GWEI tip to be candidates for inclusion. With that said, specific mining pools may choose to set alternative minimums for inclusion.

A somewhat subtle nuance to the Max Priority Fee is that it represents the maximum tip you are willing to pay a miner. However, if the Base Fee plus the Max Priority Fee exceeds the Max Fee (see below), the Max Priority Fee will be reduced to maintain the Max Fee's upper bound. This means the actual tip may need to be smaller than your Max Priority Fee and, under such circumstances, your transaction may become less attractive to miners.

Max fee

The Max fee is the absolute maximum amount per unit of Gas you are willing to pay to validate your transaction. Things can get a little tangled here because your actual transaction fees will almost always be lower than the maximum fees you choose. The following are the reasons:

The lowest gas fee for your transaction is the current base fee
What if, however, the base fee increase before your transaction is finished? Your transaction may then become stuck, fail, or be abandoned.
As a result, it is generally thought that the optimal approach for achieving predictable transaction settlement under EIP-1559 is to specify a Max fee that is expected to increase the Base fee. But to what extent should it be improved? What is the explanation for this?
For each given combination of base cost and highest priority cost, our Gas Estimator that complies with the EIP-1559 standard currently employs the following simple heuristic method to calculate the recommended maximum cost for each combination of base cost and highest priority cost. (2 * Base fee) + Max priority fee = Max priority fee

How does Traitsniper help you optimize the EIP-1559 transaction fee

Traitsniper displays the max gas estimation of the market from Blocknative. It is the reference for users to set gas price of their transactions.

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Traitsniper’s gas default setting modes include:

Normal: Metamask’s recommendation
Fast = Blocknative’s recommendation
Instant = Fast * 1.2
Mad = Fast * 2

Fast, Instant, and Mad are original from Blocknative, multiplied by the factor by TraitSniper’s recommendation to modify the Gas preset. Most of the time, these settings are not enough for snipping the top rank NFTs; TraitSniper offers custom gas prices feature for sniper’s references, snipers will be able to enter Gas Price (GWEI) and Gas Limit manually.

For example:

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Setting the right gas fee is the secret source of a successful sniper. No one wants to set too high gas fee for a transaction that leads to overpaying an NFT, which snipers are trying to avoid because it reduces the profit.

But paying to low gas fee could lead to outgassing; you are still charged for failed transactions because miners need to confirm transactions to the chain whether they succeed or fail. Therefore, you are paying for that regardless of whether your transaction goes through—especially when snipping high-demanding NFTs.

There is no proper gas fee; the secret is to keep the balance between paying a little higher than another transition request but not too high, so you lose profit even though the transaction is successful.

Some examples of failed transactions

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We recommend newbies not to invest in snipping the top rank NFTs unless you truly understand the game. The market is so volatile that people are willing to pay a massive gas fee for the transaction to compete with others. In other words, it is a high-risk, high-reward game.

Happy snipping!

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