Why is it so expensive to trade on Uniswap with MetaMask? ($50 fee)

  • The best quote that the Uniswap fox found for swapping 1 ETH for UNI token right now has a $50+ estimated transaction fee (max $80) inclusive of a 0.875% MetaMask fee. Even if I change the swap to a different token like 1Inch, the quoted fee remains unchanged.

    Why is it so expensive to trade on a decentralized exchange? Centralized exchanges would be nowhere near this level

    because 80% of all transacitons are trades by arbitrage bots. They don't mind paying 40 bucks to make a profit of 500 bucks immediately so they pay the Gas. This is going to end soon as the economy is starting a new deflationary wave and all this trading will diminish so gas prices most likely will return to 10-20 Gwei

    What date in 2021 should I check the fees again to see if they're lower?

    check it on May - June

    What estimate do you get when you set your gas price to a low value? How about if you try a smaller trade? It's unclear whether you're a victim of the gas price market, or whether you're being priced out by Uniswap's constant product formula (which makes trading rates exponentially more expensive as the size of the trade increases).

    toggling gas from fast to slow doesn't help much. $40 - $65 is still an expensive window

    just waiting for cardano to fix this issue. I tried to get some CHAIN and was asked to opay 53euro for a 30euro value

    Are there any Cardano-based decentralized exchanges planning to launch? pls link them

    @Nulik It won't be going to end soon while ETH's price keep rises

    @alper it just dropped 1,100 bucks (from 1800 to 700) on Kraken. This is it! the sell signal

    no it's not. it's $1,700 on Kraken, and only went as low as $990 in the last 10 mins

  • The answer is that uniswap is a set of Smart Contract running on the Ethereum platform and thus requires gas in order to execute any functions.

    Meaning that when you swap token A for token B or token C it is more or less the same function that is being called in order to perform the necessary logic of matching buyers and sellers.

    This is only an issue (such as a $50 fee to perform a $10 trade) when gas prices are high or the value of Ethereum is high (both of which are true right now)

    This results in a lot of people lowering the gas price they are willing to pay in order to make the transaction cost affordable.

    As well as others raising the gas price to make their transactions execute efficiently or quickly.

    As a result of these circumstances we end up with a lot of cancelled transactions and a huge pool of unseen or unconfirmed transactions that are waiting to be propogated throughout the nodes within the ethereum network by the miners.

    Low gas price transactions have a high cancellation rate and high latency which results in miners adding old or outdated transactions to blocks that could result in double spends if verified by a node in one block and unseen/unconfirmed in another block from a different nodes transaction history.

    With all of that being said. Miners dont get paid if they fill a block with nothing but unconfirmed transactions from two weeks ago that no longer have the sufficient funds to carry out the transaction (or it could be a double spend) most people speed up the transaction or re send it with higher gas prices so it executes in a timely manner.

    Overall the answer is that the ethereum network is congested and in order to maintain security they do not want more transactions they want to try to decrease the workload one way of doing that is raising the price to use the network and only servicing those transactions that are willing to pay that price.

    Its a security counter measure as well as a way to mitigate a high demand in network power

    Also keep in mind that centralized exchanges are using the same network, only they use batch orders and deal with larger and more complex transactions to secure their cheaper off chain trades (which are settled on chain only when a customer tansfers the assets out of the centralized exchange to an on chain wallet) in reality they are probably benefiting from a problem (increased gas prices and network congestion) that they are likely the leading cause of. Its a good way to direct dex users to their centralized exchanges and sounds a bit like a marketing strategy to me

    To me, decentralized exchange owners are driven by the same incentives, and are no different financially in terms of altruism than, centralized exchange owners. Swap fees on a DEX are hardly any different than trading fees on a CEX

License under CC-BY-SA with attribution


Content dated before 7/24/2021 11:53 AM