Blockchain-based finance cuts out the intermediaries to save users on transaction costs, but that doesn’t mean it’s entirely free to use. Rather than giving the bank its cut, users are instead required to pay “gas” fees, which are used to reward either the miners or the validators that process payments and secure the underlying blockchain.
With most blockchains (but not all!) these gas fees are much lower than what a traditional bank would charge – especially for cross-border payments. But in some circumstances they can be very expensive. Ethereum, for example, is notorious for its high-traffic causing big spikes in gas fee costs, and some users have been forced to pay hundreds of dollars to ensure their transactions are processed in a timely fashion.
Fortunately, crypto is nothing if not innovative, and there are several ways users can reduce these gas fees. One of the most efficient new methods is Ambire Wallet’s transaction batching capability.
What Is Transaction Batching?
As the name suggests, transaction batching involves bundling several payments into one, so the user only has to pay the gas fee once to perform several transactions. This can help reduce gas fee costs by a significant amount, which is why it’s becoming more common with the growing awareness of smart wallets that support this capability.
For instance, Ambire Wallet enables transaction batching by using smart contracts that can hold multiple transactions and process them together simultaneously, distributing the outcomes to the recipient wallets in one fell swoop. The gas fee is only paid once, split across however many transactions the user decides to batch.
When Is Transaction Batching Useful?
There are many real-world situations where this feature might help to save on gas costs. The obvious use case is decentralized finance or DeFi, where users often have to make multiple transactions to swap tokens and shift their funds into different protocols. Then there are times when blockchain networks can be heavily congested, resulting in exorbitant gas fees. Users can save a lot of money by batching transactions during these peak times.
An example of this might be when a popular new NFT collection is minted. Such NFTs are often in huge demand, and thousands of people try to mint them all at once, putting severe strain on the underlying network and increasing costs.
How Transaction Batching Saves Money
While there are other ways to reduce transaction costs, such as using Layer-2 networks and special gas tokens that enable lower fees, few solutions are more elegant than batching transactions.
Transaction batching can be used to great effect in various ways. For example, a user might batch a transaction approval and swap into one to save gas fees, or else batch multiple swaps on the same blockchain network into one. They could buy a new token, such as SOL, and then stake it in a DeFi dApp in one go. Alternatively they might want to send a series of payments to different addresses, in which case it makes sense to bundle them. In some cases, the user might need to swap a token first so they have the funds required to make a payment in a different token. This swap and send can also be bundled into one.
For example, let’s say Joe has all of his crypto savings in an obscure token like FET but needs to use FLOW to buy an especially desirable new NFT that’s being minted on the Flow blockchain. Because most exchanges don’t support FET to FLOW swaps, Joe will need to swap his FET to buy a more common token such as ETH. Then, he must swap his ETH for FLOW. Finally, he’ll use his FLOW to buy the actual NFT. So that’s three transactions.
We can visualize this. Let’s say Joe’s NFT costs 2,165.10 FLOW ($2,602) and he’s trying to buy it at a time when both the Ethereum and Flow networks are heavily congested:
- Transaction 1: Joe swaps 1,000 FET for 0.735 ETH and pays 0.06731091 ETH ($240) in gas.
- Transaction 2: Joe swaps his 0.735 ETH for 2,165.10 FLOW and pays 0.046725 ETH ($166) in gas.
- Transaction 3: Joe pays 2,165.10 FLOW to acquire the NFT and pays 12.55 FLOW ($12.55) in gas.
So the total gas cost is $418 across the three transactions.
But by consolidating those transactions into one, Joe simply pays just one fee, which is the average gas cost of those three transactions. As such, Joe’s total gas fees are just $139.33. That’s a pretty big saving, and Joe is going to be very happy.
Other Benefits Of Transaction Batching
Transaction batching isn’t just about the savings. Another major benefit is improved security, as the ability to consolidate payments and swaps will minimize the attack surface. Because only a single transaction is broadcast to the network, it reduces the window of opportunity for hackers. In addition, wallets like Ambire that support transaction batching also offer a simulation feature that enables users to preview the outcome of complex, batched transactions, reducing the chances of the user making an error.
A final benefit is enhanced scalability for the underlying blockchains. Processing multiple payments and swaps at once reduces the overall load on the network, putting it under less strain and benefiting every user. So, if transaction batching becomes more commonplace, it could go a long way toward helping blockchains scale.
Saving Users Time And Money
It might be a relatively simple concept, but transaction batching promises to be a game-changer for blockchain users, helping them to save a significant amount of money on gas fee costs. For instance, Ambire Wallet claims to have saved its customers a combined $27,000 on gas fee costs since launching this feature last year.
The ability to batch transactions results in faster and more cost-efficient blockchain payments and is yet another example of how cryptocurrency is innovating to provide users with advantages that simply aren’t possible with traditional finance.
