❌ What are transaction failures, and how can you prevent them?
Many transactions are made every day within the crypto world, and while the majority of investors have no issues… There are instances where transactions can fail and impact the user financially as a result. Luckily there are ways to prevent this from happening... after all, no one wants to see their hard earned money be wasted on transactions that never completed, right? With that being said, let's jump into how you can protect yourself 👇
⛽ How gas fees can impact transactions
The first on the agenda is gas fees. If you don’t know what gas fees are, they are simply a fee that is required to enable a transaction to occur on the blockchain.
However, it is important to note that gas fees vary based on blockchain type and congestion.
The reason gas fees can result in your transaction failing is because that fee allows the transaction to then be processed through the blockchain, and without it, it simply cannot process it, meaning the transaction will fail and you will likely still be charged. Now, you’re probably wondering why you are still charged, even if the transaction has failed, right? This is a simple answer… the blockchain continues with the processing procedure to confirm the transaction either way, especially if we take the Ethereum blockchain as an example, the miner will still need to confirm this on the blockchain, meaning the fee will charge but the transaction will fail. Luckily, there is a solution for this... Make sure you have enough to cover gas fees. It truly is that simple, and as we mentioned before, these fees can vary, so make sure to check the prices of gas fees before making the transaction, so you can roughly work out how much you need in gas fees for the transaction to be successful.
🔁 Managing your slippage
And now moving onto the other reason a transaction may fail… slippage. This is when there is a difference between the expected price of a cryptocurrency and the price at which the order is filled. For example, if a trader places an order to buy Bitcoin at $60,000, but by the time the order is executed, the price has moved to $60,050, the trader experiences a slippage of $50.
The main reason for slippage is to protect the liquidity difference, and if your slippage is too low, it may lead to the transaction failing.
So, how do you prevent this from happening? Quite simply… you increase the slippage rate so that there is a higher chance of levelling the liquidity difference. But be careful when adjusting the slippage rate as it impacts how much you get for the price. For example, if you had a 25% slippage, you could potentially be getting 25% less tokens for the same price as liquidity could force the price to adjust within the 25% range and that ends up impacting how much you get for your chosen price. Overall, most transaction failures will into either of these categories, so keeping up to date and understanding how gas fees and slippage can impact your trades is vital, as this is your financial future, and we want you to take control of it one step at a time. Remember, the crypto world can be daunting, and it is more important than ever to keep yourself educated, and transaction failures are more common than many think, so be careful when trading and always stay up to date!
