Gasless Transactions & How They Are Leveraged in Precog Finance’s Decentralized Derivatives Marketplace

Gasless Transactions | Precog Finance

Gas fees are the bane of many crypto traders, and a common source of confusion for newcomers. One can either look back and reminisce about the days when transactions on the Ethereum network would cost a mere few cents, or look in absolute shock at the present costs of interacting with the biggest smart contract blockchain in the world.

Luckily, however, Blockchain is in an industry ripe with innovation, and for most problems, there are ways around — and that includes solutions for exorbitant (transaction) gas fees. In this article, we’ll be taking a look at what gasless transactions are, and how Precog Finance’s Cerebral utilizes them for its Decentralized Derivatives marketplace.

But First, What is Gas?

The term gas is used to define transaction costs on a blockchain network, which can range from simple token transfers to complex smart contract executions. In Ethereum, gas is also referred to as Gwei (Polygon uses MATIC, Binance Smart Chain uses BNB…); these are fractions that make up a single ETH token, but given the price of 1 ETH, it should come as no surprise that these fees can cost quite a significant amount for most people.

Gas is needed to pay the miners for their work and contribution to the network that includes carrying out such processes; otherwise, they’d have no incentive to run the expensive and energy-hungry machines that are required to keep the network running. These gas fees can be adjusted to give certain actions priority over others, but most wallets display the average fees by default for convenience.

The Significance of Gas

In the case of Ethereum, gas fees tend to cost around the $20 equivalent of Gwei for ERC20 token transfers, but vary depending on network usage and congestion. For instance, it’s not uncommon to see simple fees ranging from $30-$40, and triple digits have been hit on more than one occasion.

Token swaps, adding/removing from liquidity pools, and other smart contract interactions cost much more, and one could already see the flaws and imperfections of the current state of the network. Such high fees have unfavorable implications on DeFi; in particular, it effectively makes Layer-1 Ethereum trading costly and inaccessible for small investors and users.

It is true that other blockchains — specifically those that utilize some form of PoS (Proof-of-Stake) consensus mechanisms — have lower transaction fees, but in times of high network traffic, even these fees can add up to a significant amount. Most blockchains are decentralized enough to allow Dapps to build on their mainnet without any approval, and an influx of such applications and their subsequent increase of on-chain activity can cause congestion, which in turn causes fee spikes.

The other problem with gas tokens is that since they’re each native to their respective blockchains, they tend to have no use in other networks. While they can be wrapped using bridges — which in and of itself can be a lengthy process for beginners — and then traded on various DEXes on different networks, their usage ends there.

It can therefore be time-consuming for beginners to trade across various chains without having to go through various hoops in order to avoid centralized solutions. Cerebral’s approach to gasless transactions overcomes these issues, and as you’ll read below, helps the DEX remain decentralized while also offering users a multi-chain platform without the need for multiple gas tokens.

Enter Gasless Transactions

Gasless transactions, as the name implies, are those that do not require gas for executing trades on a blockchain network — specifically from the user’s end. There are two possible ways this is done.

The first one, instead of the user paying for the transaction costs, the gas is handled by the Dapp and its developers. All a user has to do is sign a message detailing what they’d like to perform, and the Dapp, upon receiving the message, executes the transactions.

The second one, the platform implements gasless transactions as a way to provide interoperability and simplicity — and this is how Cerebral utilizes them. Cerebral aims to be a multi-chain protocol, and by leveraging this technology, it can ensure that the only gas token required to interact with various different blockchains is the PCOG token. By doing so, Cerebral remains a DEX, while offering one of the most major selling points of CEXes.

Since the gas is PCOG, this creates a substantial demand for the PCOG token in the market — especially considering the multi-chain capabilities and ambitions of Cerebral. Users don’t have to worry about not being able to transact on account of not having enough ETH, as their PCOG tokens will be enough to smoothly trigger any on-chain interaction including ERC-20 transfers, adding and removing liquidity and other smart contract executions, without any additional hoops to go through.

It should also be noted that Gasless Transactions differ from Layer-2 solutions; while the two share some similarities, they are distinct in how they function. In a nutshell, Layer-2s utilize a technology called Rollups and take transactions off-chain, whereas Gasless Transactions can take place on the base layer, where the fees are essentially relayed.

Cerebral: The First Decentralized Futures & Options Marketplace

Cerebral is a community-oriented environment, where users define, create, and deploy custom-built synthetic assets. We implement a decentralized order book to record trades on this platform while incentivizing the community to provide deep liquidity by contributing pooled assets. The parameters determining these contributions will be purely market-driven, based on demand and supply metrics or time to expiry. Expectedly, liquidity providers will earn revenues proportional to their contributions.

It is the first-ever marketplace for decentralized futures and options, and in the spirit of democratizing finance and providing accessible trading solutions to users worldwide, Cerebral will utilize Gasless Transactions to lower the barriers of entry to DeFi users both new and old. By simply connecting a compatible wallet, anyone can use Cerebral and trade with most (if not all) ERC20 tokens — and even non-Ethereum tokens in the future.

After all, what does decentralization mean if it’s out of the reach of many?

Curious about Cerebral? Find more about Precog Finance on:

Website: https://precog.finance

Twitter: https://twitter.com/PrecogFinance

LinkedIn: https://www.linkedin.com/company/precog-finance

Facebook: https://www.facebook.com/precog.finance/

Instagram: https://www.instagram.com/precog.finance/

Telegram: https://t.me/Precog_Finance

Whitepaper: https://precog.finance/pdf/whitepaper.pdf

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Precog Finance

Precog Finance

Decentralized Derivatives trading ecosystem powered by AI, governed by community.