- Uniswap trading fees have hit the high double figures in recent weeks as the Ethereum price has spiked
- The spike is pricing many out of the decentralized market, which is the opposite of its intentions
- There are now Uniswap alternatives claiming to offer much cheaper gas fees, but how do they stack up?
Uniswap trading fees have been a sore spot for many months now, and the issue has driven innovation in the space as competing exchanges try and find ways to reduce costs and pinch Uniswap’s customers. As a result there are now a number of alternatives out there who claim they offer much reduced or even fee-free trading on ERC-20 tokens, but what are they and do they stand up their promises? We took 0.01 ETH to find out.
Zero exchange is powered by the Avalanche blockchain and boasts near instantaneous transaction times alongside, as the name suggests, zero trading fees. The only catch is the necessity to swap your ETH or supported stablecoin into the Avalanche version of that token, a process that has to be conducted on the Ethereum network first.
This need for a cross-chain transaction means you still face a Uniswap-high fee for the initial swap and then again when you want to swap back, which almost negates the point. For those wanting to conduct multiple trades however, this could be seen as the equivalent of paying through the nose to get into the club, but all the drinks are free – you just need to have enough drinks to make it worthwhile.
Seeing as we had to convert our 0.01ETH to zETH before we could try and anything, we needed to use Zero’s cross-chain conversion as our test transaction:
This fee of $54.95 was pretty much in line with the Uniswap gas fee at the time, and it should be noted that because we were conducting the trade through our MetaMask wallet, we had the opportunity to manually set the fee, which reduced it slightly to $50 for a slower transaction, increasing the risk of failure. This is of course something you can do in Uniswap too.
If you don’t want to convert your tokens onto the Avalanche version then you can still transact in native ERC-20, although of course you will face the resultant high fees on every transaction, just like on Uniswap.
1inch is an exchange aggregator that looks at a bunch of decentralized exchanges including Uniswap and tries to find the best price, as well as offering a claimed saving of up to 42% on gas fees, which it achieves through its CHI Gastoken innovation. It serves straight up ERC-20 trading so no need to convert to another blockchain, so we set out with our trusty 0.01 ETH and tried to buy some AAVE.
Unfortunately, our test transaction yielded a slightly disappointing result:
Only an $8.86 saving, representing a miserly 5%, and a fee some three times more expensive than Uuniswap. And this was with ‘lowest gas cost’ selected. Despite MetaMask not being involved in the transaction, 1inch still gives the opportunity to manually set the gas fees, which allowed us to drop it down to $136.57, but this wasn’t much of a saving in truth and obviously resulted in a slower and riskier transaction.
Popular Ethereum wallet MetaMask introduced a MetaMask Swaps feature into their application in October, turning the wallet into a DEX aggregator. The entire process is handled within the MetaMask app and provides an easy route for those looking for cheaper coins and slightly cheaper fees, especially for those who already use MetaMask.
We had high hopes for MetaMask, but our ETH-AAVE transaction resulted in something of a shock when it came to the gas fee:
These quotes may have included a 0.875% fee for MetaMask themselves, but still we’re not quite sure where they got those incredible figures from, being around seven times more expensive than Uniswap. What’s doubly disappointing is that there is no way to manually adjust the gas amount, presumably because they are set by third parties. This is particularly crazy when you think that the value of the transaction is less than $14!
Uniswap Has Little to Worry About
All in all then, it seems that there is no genuinely cheap way of transacting on the Ethereum network at the moment, although Zero seems to be one of the best options for those looking to conduct multiple trades.
For anyone looking for the odd Uniswap trade here and there however, it seems that you’re better off taking your chances on Uniswap itself and trying to trade when the network isn’t as busy, or wait for Ethereum 2.0 to get its skates on.