Non-fungible assets (NFTs) have performed exceedingly well in 2021. The craze for these digital assets started at the beginning of the year. Creator and investors have since made fortunes worth millions of dollars trading NFTs.
The headlines about mega-deals have attracted many people to this relatively new investment niche. According to Bitcoin.com, August became the highest month in terms of NFT sales. Statistics show that NFT sales cracked a record $1 billion during the last week of August.
Many are trying to enter the market amidst the headline-grabbing NFT sales. These creators and investors may have a simple view of the operations in the industry. However, some of the investors who have tried their hands in the NFTs market say that the processes of making fortune in NFTs may not be as simple as newbies may think they are. Some hidden factors may affect the success of people’s investments in this niche. Robert Martin, a senior content strategist at Kapwing, identifies gas fees as the major hidden factors that may affect the outcome of your investment.
What is a gas fee?
Executing any operation on the NFT platform requires computational resources. Gas is the fee needed to conduct a transaction on the NFT platform. Users are usually responsible for paying for the computational effort needed to process and validate transactions on the blockchain network. The fee fluctuates depending on other market variables that affect time and other resources for approving transactions.
NFT mania causes a spike in gas fee
NFTs have seen a resurgence since the beginning of August 2021. August recorded the highest total monthly NFT sales, hitting $1 million. However, this increase in NFT activities has come with a spike in the transaction fees. According to the stats by Bitinfocharts, the transaction fees increased by over 230% during August. The last time the transaction fee was such expensive was in May 2019 when the average price hit an all-time high for gas at $70.
One of the NFT marketplaces, OpenSea is the greatest gas consumer with approximately $6 million in network fees over the previous 24 hours at the time of writing. The amount is more than 20% of the total gas used on the Ethereum blockchain network over the past day. Axie Infinity comes second in gas consumption with over $900,000 in gas cost over the past 24 hours.
What are the effects of high gas fees?
High transaction costs usually negatively impact NFT investors. It reduces the profit margin of investments. Martin bought an NFT for $30 in March 2021, when the market was experiencing a similar hike in gas price to the one seen in August. He sold the NFT at 300% profit in less than 24 hours yet ended up losing $200 in gas fees. The fee included $80 for converting wrapped ether (WETH) into the regular ether (ETH).
Another NFT artist known by his Twitter handles @SHL0MS said he wrote off the gas fees in his experimental NFT minting. In his experiment, he minted a single transparent pixel on Rarible. The activity caused him $200 in the gas fee. However, he sold the art for $300.
This fee may pose a lot of risk to the users trying to enter the market for the first time. In many cases, the fee is hidden, especially from the beginners. Many NFT sites charge a gas fee for minting a token. They also charge fees for buying and selling digital assets. Additionally, users should take into account conversion fees between different token forms, especially when they are using wallets. Not all these fees, unless clearly stated, may be apparent to new users.
High fees prove a barrier for entry into the NFT market, especially for small-scale traders. It may lead to initial losses that may through the newbies out of the market.
Other barriers to the NFT market
Some NFT platforms are not user-friendly hence unsuitable for inexperienced traders. According to Martin, some platforms will not display all the available costs of a transaction hence. Hidden fees may cause problems to users who are not ready to meet them. Accessible and easy-to-use platforms are necessary to suit users including those outside the crypto community.
WSUM.art – an all-in-one solution
WSUM.art is built on Binance smart chain (BSC), which supports transactions at a relatively lower cost compared to the Ethereum network. Ethereum is always congested, which leads to a spike in gas prices. Contrary, BSC limits the number of validators on the network to 21. Therefore, BSC does not experience an excessive increase in transaction costs due to congestion. Whether you are a minter, a seller, or a buyer, you will always pay negligible transaction fees.
WSUM.art charges a fraction of gas fees compared to protocols on the Ethereum blockchain. Therefore, it is suitable for traders, including beginners.
WSUM Network also offers wrapped coins that enable users to use foreign tokens on its trading platforms without first converting them to the native token. The use of wrapped coins eliminates the extra cost of converting tokens hence. The general transaction cost for WSUM.art users is relatively lower than that of Ethereum-based NFT platforms.
WSUM.art also offers an easy-peasy platform suitable even for an armature. The platform lays open all the fees that a user is to incur before they confirm the transaction. It enables users to make decisions with all the data about the expenses available to them. They do not feel tricked. Additionally, all the services are also openly located on the intuitive interface. In case of any concern, support is usually available to respond to inquiries.
WSUM.art also operates a greener project by supporting environmental conservation efforts. The platform enables users to contribute towards a tree-planting project that will eliminate the carbon gasses from the environment. People consider blockchain and cryptocurrency activities dirty, in terms of carbon footprint. However, WSUM is leading the way in carbon sequestration, which will make the industry greener.
Join WSUM.art and start trading minting and trading NFTs at a low cost and in an ecologically friendly manner.