OpenSea Gas Fees Explained

Hi everyone,

In this lesson I want to talk about Gas Fees.

I will mainly focus on the Ethereum blockchain gas fees.

Currently the Ethereum blockchain gas fees are extremely high, so keep in mind that near the end of the lesson I will give you some alternatives to the Ethereum blockchain.

Ok, let’s begin.

So, we already have a lesson in this course about the actual meaning behind the concept of Gas Fees, but to put it simply, Gas fees are simply… processing fees.

Like the processing fees that Credit card companies charge.businesses with.

On the Ethereum blockchain we are charged with Gas fees whenever we try to make a transaction. After all, when a transaction occurs on the Ethereum blockchain, someone needs to handle the transaction.

In the physical offline world this someone can be a Bank, for example, but on the Ethereum Blockchain there is no bank involved, so someone needs to again handle the transaction and also get paid for the work — so on the blockchain this someone is called a miner.

A miner (like a miner that works inside a coal mine) is a person, like you and me, who is willing to allocate his / he computer processing power to handle the transactions that occur on the blockchain, and thus this miner gets compensated through gas fees for the work.

Now, before we start analyzing the Opensea fees I suggest that you search on Google for the words opensea fees, and then click the What are gas fees on Ethereum? — OpenSea search result to reach the page that I am currently on.

I would also suggest that, from time to time, you come to visit this page to get the latest updates regarding the current Ethereum gas fees.

The reason that I suggest that you will read this page from start to finish and also throuthly is because gas fees on Etherium can be, like in this current day, extremely high, so much so that we might even lose money after a sale of our NFT due to the extremely. high gas fees.

Just imagine registering to Opensea, creating a collection, creating and listing your NFT, eventually selling your NFT for $50, and then realizing that you actually lost money from the sale because you were charged with $500 of gas fees.

So, it is extremely important to list our NFT for a high enough price and also learn everything we can about the Ethereum Gas fees, so we will never be surprised by the gas fees charges.

Now I specifically said the Ethereum gas fees because as I alluded to in the beginning of the lesson, in different blockchains and on different NFT marketplaces we will pay different fees.

We will even pay different gas fees on OpenSea itself.

Just as an example if we list our NFT on the Solsea,io marketplace our gas fees will be extremely low, maybe just a few cents or even less than a cent, and if we list our NFT on the Polygon blockchain (which is a blockchain within Opensea) we will not pay any gas fees at all (currently we will just pay a 2.5% service fee to Opensea and this fee will only be charged from us if we are are actually successful in selling our NFT — or in other words if we will not sell our NFT we will not pay anything to OpenSea).

We have lessons in this course in which I show how to list a collection and an nft on the Ethereum blockchain, the Polygon blockchain, and also on the Solana blockchain (which is the blockchain that is used on Solsea.io).

Now let’s talk about how Gas is actually measured, and why we pay different gas fees at different times.

So gas fees are measured in Gewi, and Gewi is a fraction of Ether (ether is the ethereum blockchain cryptocurrency).

1 GEWAI equals 0.000000001 ether

So, we can basically look at Ether as dollars and on Gewei as cents.

Now the reason that gas fees prices keep going up and down is the same reason why the price that we pay for anything else in life keeps going up and down, and the reason is simply supply and demand.

Let me give you an example. If a lecturer, for example, is invited to speak in 500 lectures every single day, but he / she only has time to speak in one of those lectures, then this lecturer might charge $100,000 for one single lecture.

But, if this lecturer suddenly loses most of his / her clients, and now instead of being invited to speak in 500 lectures everyday he / she is invited to speak at 5 lectures everyday, then he / she might only charge $100 per lecture.

The same exact thing happens on the blockchain, if at certain times there are more requests to process transactions, then the miners (again the people who use their computers processing powers to approve and disapprove transactions) can charge a lot of money to process those transactions (and thus the gas fees will be higher).

Yet in times when there isn’t much demand for approving transactions gas fees will be lower.

In a nutshell, the more transactions requests there are at any given time, the higher the gas fees will be.

So, now let’s talk about the different Gas Fees we need to pay when we want to list our NFTs on the Ethereum blockchain.

Ok, so there are basically two kinds of fees that we need to pay.

One-time fees and recurring fees

Let’s analyze each one of those fees one by one.

The first One-time fee is the:

Account initialization fee — this is a fee that we need to pay to register with Opensea.

Now the amount that we will be charged will vary because, as I said previously, the supply and demands for approving transactions also vary.

But let’s say that on average we can expect to pay a $150 account initialization fee — and again this is a one time fee.

Now if we are selling our NFT for a fixed price, then the Account initialization fee is the only one time fee that we must pay, yet if we want to sell our NFT in an auction then there is another one time fee that we need to pay and this fee is the auction approval fee.

Just to make it super clear, the Account initialization fee must be paid to sell on Opensea (there is no way around it) yet the auction approval fee is optional, and as its name suggests, we only need to pay it if we decide to sell our NFT on Opensea — through an auction.

What is mutual for both the account initialization fee and the auction approval fee is that we only need to pay them once, so no matter how many collections, NFTs, and auctions we decide to create on Opensea those fees will not be charged again.

Now, In order to pay the auction approval fee, we need to approve a token (which is is called WETH (which stands for Wrapped ETH) and WETH is worth exactly as eth — eth is the native token of the Ethereum blockchain).

Now even though the ETH token is worth exactly like the WETH token we still need to convert our ETH to WETH in order to pay the auction approval fee, so we can later list our NFTs on auctions — but this token conversion is done within Opensea, so we don’t need to go to any external website to convert the tokens.

So now that we have covered the one time fees, let’s move over to the next batch of gas fees, and these batch of fees are the recurring fees.

Now, many people don’t pay attention to the recurring fees, but as we all know the devil is in the details.

I will explain what I mean by that.

Let’s say that we have created an auction, and someone has put a bid on our auction.

Now, if we decide to accept this person’s offer we will need to pay a gas fee for that transaction.

And if we have listed multiple NFTs on auctions, and we got multiple offers that we want to accept, then each time that we accept an offer we need to pay a gas fee.

So for this reason that gas fee is under the recurring fees caption — because again we need to pay this gas fee each and every time that we accept an offer on our auction.

So, I know that all the information that I have given you so far in this lesson can be confusing, so let’s stop here, and summarize all the gas fees that we need to pay so far through an example.

Let’s say that John has just created his NFT, and decided to list it on Opensea through an auction.

So in this example John will need to pay (on average):

$100 Account initialization fee

$100 Auction approval fee (to be approved for the WETH token).

$100 Auction bid acceptance fee.

$100 WETH to ETH Conversion Fee (I will talk about this conversion fee shortly).

So, the total amount that John will pay is $400 of gas fees, so in order to make a profit from his auction John can either start his auction for a very low starting price, and put a reserve price of more than $400 or he can start his auction for a high starting price (which is above $400 with no reserve price.

Now the prices that I mentioned are just an example so we will have some kind of a structure, but as I said previously gas prices fluctuate based on supply and demand, so the gas fees you will personally pay might be much higher or much lower than the prices that we have in this example.

I actually suggest that you will. try to pay gas fees in different hours of the day, because the differences can be extreme, so in certain hours you might be asked to pay $400 for the. Account initialization fee, for example, and in other hours of the day you might be asked to pay less than $100.

Now let’s talk about the last fee on the list., the WETH to EATH conversion fee, if you do decide to list your NFTs through an auction, then you are going to be paid in WETH, and on Opensea converting the WETH token back to ETH is also going to cost us gas fees.

Now let’s say that after John saw all those gas fees, he now considers listing his NFT for a fixed price rather than through an auction.

If that’s the case, then let’s remove the auction related gas. fees from our gas fees list, so we will have a better understanding of the gas needs to pay in a fixed price listing.

The Account initialization fee is a must if we want to work with Opensea, so we will keep it.

Yet, we can. cross out the Auction approval fee, the Auction bid acceptance fee, and the WETH to ETH Conversion Fee which are not relevant when we list our NFT for a fixed price.

We also need to add a new fee to our list which is the listing cancellation fee, yet I will gray out this fee because it will only be applicable if we list an NFT, but then decide to cancel our listing (as NFT sellers we. also pay a gas fee when we cancel a bid. We will not pay bid cancellation fees as buyers).

The cancellation fees are there because, again as I said in the beginning of the lesson, miners need to process transactions on the blockchain, and cancellation is considered a transaction, and thus listing cancellation carries with it gas fees, so canceled listings will never be fulfilled.

By the way if you decide to lower (not raise) the price of your NFT in your NFT listing you don’t need to pay additional gas fees.

So right about now you may be asking yourself the question.

If Amir (that’s me by the way) says that every transaction on the Blockchain costs gas, then why do you say that John is not going to pay any gas fees in a fixed price listing.

My answer is that..you are right I did say that John is not going to pay gas fees in a fixed price listing, but I didn’t say that gas fees are not going to be paid. Gas fees will be paid to the miners for their work.

The miners will simply not get the gas fees payment from John, but from John’s buyer.

Let’s say that the buyer’s name is Laura in John’s example.

Miners will also receive a gas fee payment if Laura will bid on John’s auction, but then decide to withdraw or cancel her bid.

Now,it is also possible that Laura will pay gas fees for John’s NFT, but will not get one.

I will give you an example how this can happen.

Let’s say that John has released a huge collection of 10,000 NFTs to the NFT marketplace.

Now, let’s also say that this John is a famous actor, and 50,000 people from all over the world want to get one of the NFTs in his 10,0000 NFT collection.

If that’s the case, and Laura tried to buy an NFT from John, but she was not one of the first 10,000 people to get an NFT, she (and the other buyers who failed ot get an NFT) will still need to pay gas fees just for their attempt to initiate the transaction to acquire the NFT — so a the end of the day they didn’t get an NFT from John, yet they still paid gas fees (Which will not be refunded)..

If the 40,000 buyers who failed to get an NFT wanted to increase their chances of getting the NFT from John, then they could have set a higher gas limit to give a better incentive to the miners to process their transaction faser.

In other words, the higher a buyer is willing to pay gas fees the higher priority his / her transaction will be.

Now I don’t want to throw the term gas limit without explaining it, so gas limit simply refers to to the maximum amount of gas fees that one is willing to spend on a specific transaction.

Inside the Metamask digital wallet, for example, there is an option to increase or decrease the gas limit.

As I said a high gas limit will give the miners an incentive to process our trasnaction first, but the flip side is that a low gas limit which is too low may even cause the miners to ignore our transaction completely.

In my example many people wanted to get one of the NFTS in John’s collection, but in times where there is maybe just a few requests to process transactions on the Ethereum blockchain, then there will not be much demand for miners, and thus miner will not prioritize the high incentive transactions, and thus ALL BUYERS will get their nfts after paying their gas fees (in this case, gas fees will be relatively lower).

Now let’s say that John decides to transfer or gift his NFT to a specific person, then in this case John will have to pay a gas fee for this transaction. And if John decides to do a whole giveaway, meaning to give NFTs for free to a number of people, for example,then accordingly John will need to pay a gas fee for each of the transactions.

Lastly we are also charged a recurring gas fee whenever we decide to freeze a listing metadata, in simple words, freezing a listing metadata simply means that there is a gas fee whenever we want to store our listing information inside a safe decentralized file storage. Every piece of data in our NFT listing will be stored in this case. Everything besides the unlockable content (if it was added of course).

And by the way once your NFT listing data has been freezed (or to use another word — stored) it can’t be edited nor removed.

Now if this was a lesson in a regular physical classroom then I guess that at this point I would be one of the only people in the classroom after listing all the Ethereum gas fees on the blackboard.

But if someone is still watching this lesson, and I am not actually talking to myself which I often do (not really, but actually I do) then I want to offer two alternatives which will let us all reduce our gas fees.

So, the first alternative is to simply list your NFTs on the NFT marketplace Solsea.io. (which is on the Solana blockchain) Currently if. we list your NFTS there, our gas fees will be less than a cent.

The other alternative is to list our NFT on the Polygon blockchain instead of the Ethereum blockchain. When we list our NFTs on the Polygon blockchain we will not pay any gas fees, and our only fee will be a 2.5 percent service fee that we will pay Opensea only if we are successful in selling your NFT.

Now if you are wondering if you need to pay a gas fee to use the Polygon blockchain as a buyer, meaning when you want TO BUY an NFT which is listed on the Polygon blockchain, then the answer is yes.

Yet, you will only pay gas fee as a buyer if you need to transfer Etherium funds (meaning ETH) to your Polygon digital wallet.

You see when you want to buy. an NFT which is listed on the Polygon blockchain, and you only have eth in your digital wallet then you will need to bridge (meaning move) your eth to the polygon blockchain, because the cryptocurrency that is used on Etherium blockchai is eth and the cryptocurrency. that is used on the polygon blockchain is called Polygon ETH.

The name is very similar, but each one of the token names represents a different cryptocurrency.

This bridging of funds, which can be done directly on Opensea, costs gas fees, which are used for converting the funds. Gas fees will be deducted from us when we convert. ETH to Polygon ETH, and vice versa.

Saying this, currently those gas fees are also extremely low.

Now I have added lessons to this course in which I explain in a step by step manner how to list your NFTs on all the blockchians that I mentioned in this lesson. The Etherium blockchain, the Solan blockchain, and the Polygon blockchain.

Ok, that’s it for this lesson, and I will see you in the. next lesson…goodbye