Automated Staking Rewards Tracking Guide
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August 6, 2025
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July 30, 2025
Gas fees can make blockchain transactions expensive, especially during network congestion. To save on costs, you can choose between Layer 1 blockchains (like Ethereum) and Layer 2 solutions (like Arbitrum or Polygon). Layer 1 offers high security but comes with higher fees and slower speeds. Layer 2 reduces costs by processing transactions off-chain and settling them back on Layer 1, making it ideal for frequent, smaller transactions.
| Feature | Layer 1 | Layer 2 |
|---|---|---|
| Transaction Costs | High during congestion | Lower, often <$1 |
| Speed | Slower | Faster |
| Security | Highest | Relies on Layer 1 |
| Best For | Large, critical transactions | Everyday use, micro-transactions |
Use Layer 1 for security-critical tasks and Layer 2 for saving on fees in frequent transactions.
Understanding how Layer 1 gas fees work can help you make smarter choices when it comes to transactions. These fees are structured in a way that directly affects your costs and the speed of your transactions.
Layer 1 gas fees are based on a simple idea: you pay for the computational power needed to process your transaction. The total cost depends on three main factors: how busy the network is, how complex your transaction is, and the gas price you're willing to pay.
"Gas fees are integral to crypto – they fuel transactions and smart contract executions on blockchain networks." - Khalid Akbary
Take Ethereum, for example. It’s the most widely used Layer 1 network, and in August 2021, the London Hard Fork introduced a new fee system. This replaced the old auction-based model with a more predictable structure. Now, the gas fee is calculated like this: Gas Units Used × (Base Fee + Priority Fee).
The base fee adjusts automatically depending on how busy the network is, and it’s burned to reduce Ethereum’s total supply. The priority fee, or tip, goes to validators to speed up transactions. This system makes fees more predictable, but you can still pay extra to get faster confirmations.
Different types of transactions use varying amounts of gas. For example:
Here’s a quick breakdown of gas usage and costs at a gas price of 20 gwei:
| Transaction Type | Gas Units | Approximate ETH Cost (at 20 gwei) |
|---|---|---|
| Simple ETH Transfer | 21,000 | 0.00042 ETH |
| ERC-20 Token Transfer | 45,000–65,000 | 0.0009–0.0013 ETH |
| Smart Contract Interaction | 100,000 or more | 0.002 ETH or higher |
Network congestion plays a huge role in determining fees. When demand for block space spikes, fees can soar to $50 or more, especially during peak times on Ethereum. This fee structure has its advantages but also creates challenges during high-demand periods.
High network demand often leads to unpredictable and sometimes extreme fee spikes. One of the main issues with Layer 1 gas fees is this variability. Since blockchain networks use fee auctions, higher bids get priority, which can drive up costs significantly.
Scalability is a big part of the problem. For instance, Bitcoin can handle about 7 transactions per second, while Ethereum processes between 15 and 30. Compare that to Visa, which handles thousands of transactions per second, and it’s easy to see why blockchain networks get congested and fees shoot up.
These limitations can have real-world effects. High fees can make even basic transactions too expensive. For example, during Bitcoin's peak demand in late 2017, fees climbed above $30. Similarly, Ethereum fees can sometimes exceed the value of smaller transactions, making them impractical.
The "blockchain trilemma" - balancing scalability, security, and decentralization - adds another layer to the issue. Most Layer 1 networks focus on security and decentralization, which limits how many transactions they can process and leads to higher costs during busy times. Fees tend to drop during off-peak hours, like late at night or on weekends.
Even with these challenges, Layer 1 networks are still essential for transactions that require the highest levels of security.
Despite their higher costs, Layer 1 blockchains are the go-to choice when security and permanence are critical. They’re ideal for high-value transactions where the added cost is worth the extra protection and the unchangeable nature of the record.
Layer 1 is also a strong option for long-term asset storage and operations that require maximum security. These blockchains are built on decentralized networks, making them resistant to censorship and reliable for settling complex tasks like DeFi activities or protocol governance.
The decision to use Layer 1 often comes down to weighing the transaction’s value against its gas fee. For high-value transactions - typically involving hundreds or thousands of dollars - the gas fee, even if it’s $10 to $50, is a reasonable trade-off for the added security. For smaller transactions, however, Layer 2 solutions might be a better, more affordable alternative.
Layer 2 solutions have stepped in as a practical way to address the high gas fees that often plague Layer 1 blockchains like Ethereum. These solutions work by handling transactions off the main blockchain, which helps reduce congestion while still keeping the security benefits of Layer 1 intact. Not only does this approach lower costs, but it also speeds up transaction times - a win-win for users.
The magic of Layer 2 lies in its off-chain processing. Instead of having every transaction compete for space on the main blockchain, Layer 2 solutions take care of most of the heavy lifting off-chain. They then group hundreds or even thousands of transactions together and submit them back to Layer 1 as a single batch. This process, known as transaction batching, spreads the gas cost across many users, making individual transaction fees much cheaper. Think of it like carpooling: sharing the ride lowers the cost for everyone.
Layer 2 solutions have been shown to cut Ethereum gas fees by as much as 99%. For example, during times of high network traffic, a single Ethereum transaction might cost anywhere from $10 to $100. On the other hand, using Arbitrum, the same transaction might only cost a few cents. Recent stats even show that Layer 2 networks are now handling 11 to 12 times more transactions than Ethereum's main chain.
There are several types of Layer 2 technologies, each offering unique methods to lower fees and increase efficiency. The most well-known are Optimistic Rollups and ZK-Rollups, but other methods like sidechains and state channels also play a role.
Layer 2 solutions bring more than just lower fees to the table - they also significantly speed up transactions. While Ethereum transactions can take several minutes during busy times, Layer 2 networks can confirm them in mere seconds. This makes them perfect for everyday blockchain activities like DeFi trades, NFT transactions, and gaming.
For instance, in July 2025, Ainvest highlighted how Layer 2 solutions like Arbitrum make small payments - such as tipping content creators or buying in-game items - more practical. By bundling transactions, costs are shared among users, reducing the financial strain on the main chain. For frequent DeFi traders, the savings can add up quickly, and NFT enthusiasts benefit from lower fees when buying or selling digital assets.
However, there are challenges to consider. Moving assets between Layer 1 and Layer 2 can involve extra fees and security concerns. For example, transferring tokens between networks often requires multiple gas payments. Withdrawal delays are another issue - Optimistic Rollups, for instance, typically require a 7-day waiting period due to their fraud-proof systems, while ZK-Rollups offer faster finality.
Centralization is another concern. Some Layer 2 solutions may sacrifice decentralization compared to Layer 1 networks. Additionally, because Layer 2 rollups depend on operators to post data to Layer 1, there’s a risk of centralization in these systems.
| Feature | Layer 1 (Ethereum) | Layer 2 Networks |
|---|---|---|
| Fees | Higher | Lower |
| Speed | Slower | Faster |
| Security | Most secure | Inherits Ethereum's security with extra steps |
| Governance | Highly decentralized | Varies |
| Best for | High-value transactions | Everyday use: DeFi, gaming, collectibles |
When deciding between Layer 1 and Layer 2, it’s all about priorities. Layer 1 offers unmatched security, while Layer 2 focuses on saving costs and speeding things up. For example, in 2024, fees on Layer 1 networks reached a staggering $66 billion, compared to just $2.95 billion on Layer 2 solutions.
Layer 1 networks emphasize security and decentralization. On the other hand, Layer 2 solutions aim to reduce costs and boost transaction speeds by bundling transactions and relying on Layer 1 for security. However, this often comes with some trade-offs in decentralization.
Here’s a simple breakdown of how these two layers stack up:
| Feature | Layer 1 | Layer 2 |
|---|---|---|
| Transaction Costs | High during congestion (e.g., ~$8.50 on Ethereum) | Lower, with rollups cutting fees by up to 80% |
| Transaction Speed | Slower due to security focus (e.g., 7 TPS for Bitcoin, 30 TPS for Ethereum) | Faster with off-chain processing |
| Scalability | Limited by block size and consensus methods | Improved with off-chain solutions |
| Security | Top-notch - transactions are fully validated on the main blockchain | Relies on Layer 1 security but may have vulnerabilities |
| Decentralization | Fully decentralized with large validator networks | Often more centralized for better performance |
| Functionality | Handles consensus, security, and data availability | Focuses on transaction processing while relying on Layer 1 |
| Best Use Cases | Ideal for applications needing maximum security and decentralization | Perfect for high-volume dApps, gaming, and small, frequent transactions |
The cost differences between these layers are striking. For example:
These examples highlight how Layer 2 solutions are tailored for users who prioritize cost efficiency.
Choosing the right layer depends on your priorities. Layer 1 is the go-to for high-value transfers where security and data integrity are critical. The higher transaction fees are often justified when the value of the transfer outweighs the cost.
Layer 2 shines when scalability and affordability are key. For instance, DeFi platforms like Uniswap and Aave have embraced Layer 2 to deliver fast, low-cost transactions for swaps and lending. Similarly, NFT marketplaces like Polygon enable large volumes of transactions with minimal fees.
Gaming applications especially benefit from Layer 2. Blockchain games often involve frequent micro-transactions - like buying items or trading assets - where Layer 1 fees would be far too expensive. Layer 2 makes these small, frequent payments practical for gaming, pay-per-use services, and even content streaming.
Timing can also make a difference. On both Bitcoin and Ethereum, transaction fees often drop below $2 during off-peak hours, like weekends or late nights. Using fee-forecasting tools can help you find these cheaper windows, making transactions even more affordable.
For everyday blockchain activities - whether minting NFTs, playing games, or interacting with DeFi protocols - Layer 2 offers a great balance of cost savings and performance, cutting fees by up to 80% compared to Layer 1.
Many users find that a mix of both layers works best. Layer 2 is ideal for frequent, smaller transactions, while Layer 1 is reserved for high-value transfers requiring maximum security. This approach allows you to optimize both costs and security depending on the transaction’s importance.
Cutting down on gas fees can be easier with the right strategies and tools. Whether you're working with Layer 1 or Layer 2 blockchains, there are practical steps you can take to reduce transaction costs.
Timing matters: Gas fees often drop during off-peak hours, like weekends, late nights (UTC), or early mornings. Simply choosing the right time to transact can save you money without any extra effort.
Customizing gas settings in wallets like MetaMask is another way to save. By adjusting the Max Fee and Priority Fee settings to fit current network conditions, you can reduce costs, especially for non-urgent transactions.
Batching transactions is a smart way to minimize fees. This involves combining multiple transactions into one, splitting the gas cost. Tools like Gnosis Safe make this approach accessible, even for more complex operations.
Switching blockchains can also make a big difference. While Ethereum is widely used, alternatives like Solana, Binance Smart Chain, and Avalanche often have lower transaction fees.
Gas tracking tools help you identify the best times to transact. Platforms like Etherscan Gas Tracker and GasNow provide real-time updates on gas fees, so you can execute transactions when costs are at their lowest.
Here's a quick look at typical gas fees for different Ethereum transactions:
| Transaction Type | Low Priority (Gwei) | Average Priority (Gwei) | High Priority (Gwei) | Estimated USD Cost |
|---|---|---|---|---|
| ETH Transfer | 10 | 20 | 40 | $1 – $3 |
| ERC-20 Token Swap | 20 | 40 | 80 | $3 – $10 |
| NFT Minting | 50 | 100 | 150 | $10 – $30 |
| DeFi Transaction | 30 | 60 | 120 | $5 – $20 |
Note: Gas fees can fluctuate based on network congestion and the price of ETH.
These strategies are a solid starting point, and tools like Wallet Finder.ai can take your optimization efforts even further.
Wallet Finder.ai is a powerful tool for anyone looking to optimize gas fees. It provides detailed insights into trading patterns across major blockchains like Ethereum, Solana, and Base.
By analyzing data from successful wallets, the platform helps you identify cost-effective strategies for different types of transactions. You can even filter and track wallets that consistently minimize gas fees while staying profitable.
The platform also offers personalized watchlists. These let you monitor high-performing wallets and get instant alerts via Telegram when they make cost-saving moves. This ensures you’re always ready to act on profitable opportunities. Additionally, Wallet Finder.ai includes a feature for exporting data, allowing you to analyze historical gas fee trends offline and uncover patterns you might have missed.
By combining these insights with strategies like transaction timing and batching, Wallet Finder.ai helps you refine your approach to gas fee optimization.
Real-time data is a game-changer when it comes to cutting gas fees. Wallet Finder.ai scans wallets across major blockchains and sends instant Telegram alerts, helping you act during low-fee windows. This takes the guesswork out of timing your transactions.
The platform also includes advanced filtering options, so you can focus on metrics like transaction frequency, success rates, and cost efficiency. These features make it easier to pinpoint the most effective ways to save on gas fees.
Custom graphs and analytics provide a visual breakdown of gas fee trends and optimization strategies. These tools help you see how factors like timing, blockchain selection, and transaction types affect your costs. With these insights, you’ll be better equipped to make smart decisions for your DeFi activities.
Deciding between Layer 1 and Layer 2 solutions depends on your specific needs in the DeFi space. Each option comes with its own set of trade-offs that influence transaction costs and performance.
Layer 1 blockchains are the go-to choice when security and decentralization are non-negotiable. With their native consensus mechanisms and direct settlements, they provide a strong security foundation without the need for bridging. However, this level of security often means lower transaction speeds and higher fees. For high-value transactions where security takes priority, these costs are often worth it.
On the other hand, Layer 2 solutions shine in terms of speed and affordability. While Layer 1's security-focused design limits throughput and increases costs, Layer 2 can handle up to 40,000 transactions per second while significantly reducing fees. For example, Starknet users saw fees drop from $6.80 to just $0.04 after the EIP-4844 upgrade. In Q2 2023, transactions on Layer 2 grew by 60% compared to the previous quarter, making up 56% of all transactions.
That said, Layer 2 does come with its own risks, including vulnerabilities in bridges, potential hidden costs, delays in withdrawals, and concerns around centralization. These trade-offs are often acceptable for micro-transactions, application-specific use cases, or experimental features.
For high-frequency traders, Layer 2 offers the speed and low fees they need, while institutional users handling large transfers may prefer the security of Layer 1.
A smart approach combines the strengths of both layers: use Layer 2 for frequent, smaller transactions and Layer 1 for high-value transfers. Platforms like Wallet Finder.ai highlight traders who successfully blend both layers, showcasing how tailored strategies can optimize gas fees. This tool offers real-time insights to help you make cost-effective decisions across both layers.
Looking ahead, emerging AI-driven tools promise even greater efficiency. These innovations, including neural network models with 92% accuracy in predicting fee changes, could reduce gas fees by up to 50%. By staying updated and leveraging data-driven tools, you can continue refining your strategy to optimize your DeFi operations effectively.
Layer 2 solutions like Arbitrum and Polygon help cut down gas fees by handling transactions outside Ethereum's main blockchain (Layer 1). They rely on methods such as Optimistic Rollups and sidechains to manage computations and store data more effectively. By taking some of the work off Layer 1, these solutions ease congestion and create more room in blocks, which helps lower transaction fees.
Another big advantage of Layer 2 is how it bundles multiple transactions into one batch before sending it to Layer 1. This approach spreads the cost across many users, making fees for individual transactions much lower than if you used Ethereum's Layer 1 directly. These features make Layer 2 a smart option for users looking to save money, especially for frequent transactions.
Layer 2 solutions, while designed to improve blockchain efficiency, can come with certain risks that might impact transaction security. For instance, smart contract vulnerabilities can create loopholes, validator fraud might occur, and there can be data availability challenges. Sometimes, disputes on Layer 2 networks may take longer to resolve, which could increase the chances of fraud or even result in the loss of funds.
These systems can also face threats like data manipulation or network spoofing, which could compromise the integrity of transactions. Although strong protocols often reduce these risks, it’s crucial to stick with well-established Layer 2 networks and stay updated on their security practices to help safeguard your assets.
You should focus on Layer 1 blockchains for high-value transactions that need top-tier security and decentralization. Platforms like Ethereum offer some of the strongest security measures, making them perfect for transactions where trust and reliability are absolutely critical.
If you're looking to manage gas fees effectively on Layer 1, here are a few tips:
By using these strategies, you can strike a balance between security, speed, and cost for your key blockchain transactions.
"I've tried the beta version of Walletfinder.ai extensively and I was blown away by how you can filter through the data, and the massive profitable wallets available in the filter presets, unbelievably valuable for any trader or copy trader. This is unfair advantage."
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Pablo Massa
Experienced DeFi Trader
Smarter trades, made simple.
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