Gas fee - again?

Gas fee isn't something that is alien of an idea to crypto dwellers like you and me. In fact, we all became too familiar with it that we know by heart which protocol has the cheapest gas fee among them. Personally, because of gas fee, I tend to do most of my swap through CEX like Binance. Gas fees are free for internal swapping, but in order to transfer them from your CEX wallet to your own hot or cold wallet, you need those gas fees.


In this one I will try to address the overall outlook or consensus in regards to gas fees when dealing with crypto. The main purpose for this is to understand how gas fee will affect us as crypto investor in our investing endeavor and attempt to rank its importance. Now I will not get into the technical part of it - such as the gas fee calculation but really just to address gas fee in general instead.

I will not address the technical part of it and the know how to navigate your trade for example, the time zone of which you can get the cheapest gas fees for your activities - but rather we are just going to talk about how the high gas fee will affect the future of the chain itself. Alright, now that we get that out of way, lets get into the talking point of the most excruciating pain in crypto - hell of gas fees.

My years in crypto

I remembered my first time using Ethereum years ago. I did not have prior knowledge of using the chain as my primary goal at the time was to play Axie Infinity. For those who did not know this, back then, Ronin Chain was not yet the mainnet for Axie Infinity, it didn't exist - a better way of putting it. The way the users of Axie Infinity was to trade on Ethereum Mainnet. Without 2nd layer! You could imagine how expensive it was.


Let me give you an example - I purchased an Axie which was worth 80 dollar, I had to pay 60 dollar in gas fees - totaling my trade to 140 dollar on Ethereum chain. Now, for anyone who played Axie Infinity in the past, you know that you will be needing 3 of that NFT at the time to form a team before playing the game. Each Axie has its own value depending on its type's popularity. Long story short, I had to spend a total of 600 dollar for a team before playing the game. Of course the gas fee gets cheaper as a result of the integration of Ronin chain as Ethereum's L2. Now, the fee became way cheaper (cents) by using the RONIN native token.


When Ronin mainnet did not exist - Axie were highly valuable. This can be pointed out and obvious of why the reasons were.

• Axie was one of the few first play to earn (Play2earn) and that on its own is enough of a reason why it was popular
• It was narrative builder (trend starter - for the lack of better phrase)
• Since trading the Axie was too expensive, no one was willing to depart with their assets for cheap - creating a circulation of "expensive" Axie NFT assets.
• While Ronin did not exist, the concept of trading their Axie NFT for a cheaper gas fee was there, making the whole ecosystem to be "perceived" as going to be MORE valuable. Money flocks for the potential return.
• People bought into the idea of playing game for a living using crypto - still does till today. What's new anyway? 😂

Now, why did I mention all of this?

If it is not obvious to you, since you did not get yourself involved with the whole Axie Infinity drama, the project does not get much more valuable with cheaper gas fee. It went downhill after RONIN mainnet was introduced to the state it is in today. People get REKT immensely. I should know, I am one of them. Luckily, I am not that stupid to put all of my eggs in one basket.


We often being bombarded by the narrative of "YOU NEED TO PAY PREMIUM PRICES TO MAKE YOUR LIFE BETTER". What that essentially mean is that, the value of the system you are dealing with is high with the ease of interacting with it. But, in reality, the easier you get things done, the less value it became. In the rule of supply and demand, that seems to be the case. More demand, more supply, but more supply means the value diminished due to oversaturation, causing flooding market with goods no body wants. Even Bitcoin goes through the same thing, where scarcity will dictates how expensive the satoshis will become.

The principle of PREMIUM may be true in tangible world we are living in, but the truth is far from the reality in crypto. Take Axie Infinity in this case. Even though the price of trading has massively gone down - I am talking about 99.9% reduction in transfer fees, the ecosystem did not thrive. And below are the reasons:

1. The 2nd layer solution for ETH for Axie Infinity (Ronin Chain) was not decentralized sufficiently enough - causing the mainnet to be hacked rather easily. With the trust gone, users left the ecosystem to protect their wealth.
2. At the time, there was too much players who tried to game the system by using Scholarship - people got scammed, mistreated, and abused. Causing some backlash in the community.
3. Since there was too much players - the amount of reward tokens became oversaturated causing the value of reward dwindling down - When the reward goes down, so does the value of Axies as NFT assets.
4. Cheaper transaction fee does not help because the issue has become entirely different thing. If anything cheaper transaction fee contributes to the declining price of the Assets - cheaper gas fee, total value of assets declined as well. As it become easier and cheaper to trade for acquiring crypto/NFT assets.

The overall outlook of this case is not unique to Axie Infinity but to other projects as well. The reason why this is important to summarize is because that the price of the gas fee does not determine how valuable a crypto project is. Cheaper gas fee just make it easier to use the chain. Don't get me wrong, cheaper gas fee means that you will get 99.9% of the assets that you invested in, and profited from. Which is one of the guiding principle in investing. You ought to reduce your fees - in order to make it as a successful investor. That alone would make the idea of "Cheaper transaction fee" more valuable in the eyes of Savvy investors. No offend, but most crypto investors are not SAVVY investors. Most of them are degenerates who wants to game the system, abuse other people, and "know it all" figures who knows shit. No offense.


That is why the value proposition of a projects does not align with how the real world business appraisal method. Personally, as someone who has been in the space for quite some time as an investor, I have noticed that a valuable project in crypto usually determined by but not limited to:

1. The number of users they have across all social media platforms
2. The level of exposure and how mainstreamed the project is at current time
3. How good is the marketing team?
4. How good is the developer in creating partnership
5. How lucrative is their investors and users rewarded
6. Does the project plays into popular narratives at the current time
7. The project's future potential are plain in sight and obvious

Most people in crypto does not care how well the business is run until the whole protocol busted, like SBF did with FTX. Or Do Kwon with Terra Luna. Look above, these projects fulfills the above points. And we wondered why many people lose their money in crypto. My take is, get out with your profit - always. Anyway, I digress.

My thoughts on how gas fees will play into all of this

To be honest, although I hate high gas fees as any other crypto users in the industry, it will not determine how well the project will be in the future. Of course we can argue that a cheaper gas fee, will make the project easier to use - hence will attract more users in the long run. Just like Solana and Matic did. But my argument is that, it will not determine how successful the project will be. Like I said, cheaper gas fee will contribute to it, but will not become the "Be all end all" so to speak. To the eyes of savvy investors, yes, it is very important. But to the prospect of how well your investment to how many fold the price will increase? - Not so much. In crypto, you follow the money, which means follow the numbers of users. Actually, I meant to say, follow the Whales. And degenerate whales do not care about the gas fees. lol.


Thus, the arguments of saying that some L2 or L3 projects would kill Bitcoin and Ethereum are therefor debunked. For any other projects to kill the first Crypto and the first Smart Contract protocol, those projects have to do herculean things - like how well they'd do in making connection, marketing, incentivizing, and play into narratives better than any other projects. I am not saying it's impossible, I am saying that it's borderline impossible. The ship to the best crypto has long sailed - we need a sturdy speed boat to catch up.

High gas fees are not going away - with more people getting themselves involve with crypto, the more congested it will become. Making it harder to trade due to the super high gas fees. A good trade off to this is that, the more congested it become, the more valuable that protocol will be, and in this case, the crypto space as a whole. Bitcoin followed this principle and continued to do so. I am expecting the next big top 10 crypto in the next 30 to 100 years to do the same. Gas fee will not play into the narrative - as much we thought it would back 3 years ago. Most of the crypto projects that aims to reduce gas fees, are playing catch-up. And it's a never ending game.

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