Any crypto native will tell you how frustrating it can be to pay high transaction fees while dealing with cryptocurrencies, as it can eat into potential profits.
Truth be told, everyone in crypto is in it to make money. So adding unnecessary expense to the already volatile market can be a dealbreaker for most people.
For example, let’s say you want to buy $1000 worth of coins or tokens. If you were to use a centralized exchange that charges a 1% fee on buy and sell orders, you would have to pay an additional $10 in fees for every transaction you make.
This may not seem like a lot, but if you plan to make multiple trades, these fees can add up quickly.
Furthermore, in some cases, depending on the platform, you may also have to pay a withdrawal fee when you want to transfer your coins or tokens from the exchange to your wallet. This can also add to the total cost of your transactions.
The good news is that there are several ways to pay nearly zero fees. Read on to find out.
What is Ethereum?
Ethereum is a decentralized platform that enables the creation of smart contracts and decentralized applications (dApps). It is the second-largest cryptocurrency and blockchain by market capitalization after Bitcoin.
One of the most popular ways to acquire Ethereum is by buying it on a cryptocurrency exchange. However, many exchanges charge fees for buying or selling Ethereum. This article will discuss a few ways to buy Ethereum with nominal fees.
Use a Stablecoin
Using a stablecoin such as USDT (Tether) to pay fewer fees when moving Ethereum or Bitcoin from one wallet to another can be a helpful strategy when the network is congested. The idea behind this is that stablecoins like USDT are generally pegged to the value of the US dollar and are designed to maintain a stable value. They are also typically faster and cheaper to transfer than other cryptocurrencies like Ethereum and Bitcoin, especially during periods of high network congestion.
Here’s an example of how you might use USDT to pay fewer fees when moving Ethereum from one wallet to another:
First, you would need to acquire USDT by buying it on a cryptocurrency exchange or converting some of your existing Ethereum or Bitcoin to USDT.
Once you have USDT, you would then send it from your current wallet to the address of the other wallet. Although USDT is an ERC-20 token, Tether USDT also has a blockchain network that charges much lower fees.
Move the USDT converted from ETH along the TetherUSDT network and not the Ethereum network, as Ethereum’s network often gets congested with skyrocketing gas fees.
Once the USDT arrives in the other wallet, you would then use it to buy Ethereum or Bitcoin.
By using USDT to pay for the transfer fees, you can potentially save a significant amount of money compared to using Ethereum or Bitcoin. Since the fees associated with stablecoins are generally lower, you can transfer the same amount of value at a fraction of the cost. Additionally, since stablecoins are faster to transfer than other cryptocurrencies, they may also help speed up the process when the network is congested.
Also, note that it’s always best to check the fees for the network of the coin you are trying to transfer and compare it to the stablecoin network you are considering using.
Use a Decentralized Exchange (DEX)
A decentralized exchange is a platform that allows users to trade cryptocurrencies directly with each other without the need for a centralized intermediary. This means there are extremely low fees for buying or selling Ethereum on a DEX.
The only fees you pay are the network/blockchain fees associated with the transactions and a very small fee that goes back to the DEX users. Every crypto transaction requires miners or validators to confirm that the transaction is valid. This takes a moment because validators and miners have to go through thousands of transactions per second while only adding valid transactions to the blockchain ledger. In most cases, these fees are negligible.
Plus, even if you use a centralized exchange, you will still have to pay network transaction fees in addition to the fees charged by the exchange. The advantage of using a DEX instead of a CEX is that the DEX will only charge you once, and these are the network fees.
For instance, the average fee for a standard transaction on the Ethereum network is around $5 to $10. However, this can fluctuate greatly depending on the network’s congestion level.
Some popular DEXs you can check out include Uniswap, Sushiswap, and Curve.
Use a Crypto-to-Crypto Exchange.
Some crypto-to-crypto exchanges do not charge any fees for buying or selling Ethereum.
This is because these exchanges make their money by charging discounts on trading fees when you trade using their platform’s native token. Examples of such exchanges include Binance, Bitfinex, and Huobi.
Binance, for instance, offers a 25% discount for trading with their BNB coin. Of course, you will still have to pay some fees for accessing the exchange’s liquidity, but the 25% discount can go a long way, especially if you are making several high-frequency trades daily.
Use a Peer-to-Peer Platform
A peer-to-peer (P2P) platform is a marketplace where users can buy and sell Ethereum directly with each other without the need for a centralized intermediary. Some popular P2P platforms include LocalEthereum and Paxful. These platforms typically do not charge any fees for buying or selling Ethereum.
Using a peer-to-peer crypto exchange such as LocalEthereum or LocalBitcoin is relatively simple. First, you must create an account on the platform and verify your identity. Once you have an account, you can search for a seller or buyer offering the cryptocurrency you want to purchase or sell. You can filter your search by location, payment method, and price. Once you find a suitable match, you can trade with the other user.
When you initiate a trade, the platform will use an escrow system to hold the funds until the trade is completed. An escrow is a system where a third party holds the funds during a transaction to ensure that both parties fulfill their obligations. In the case of LocalEthereum or LocalBitcoin, the platform acts as the escrow agent.
For example, let’s say you want to buy Ethereum using LocalEthereum. You find a seller and agree on a price. The seller sends the Ethereum to the escrow on the platform, and you send the agreed-upon amount of fiat currency to the seller. Once both parties confirm that the funds have been received, the escrow releases the Ethereum to you and the fiat currency to the seller. This ensures both parties get what they agreed upon and helps prevent fraud.
However, it is essential to note that peer-to-peer crypto exchanges are decentralized and not regulated. Therefore, it is vital to be cautious and to use the built-in escrow and reputation systems to help ensure that you are dealing with a legitimate trader.
Conclusion: You Can’t Dodge All Fees, But Don’t Pay Huge Ones
In conclusion, buying Ethereum with no fees is possible, but it may require more effort than using a centralized exchange. Decentralized exchanges, crypto-to-crypto exchanges, stablecoins and peer-to-peer platforms are all options that can be considered. Remember to always research and use reputable platforms for your trades.