Watching Ads to Waive Gas Fees on Ethereum: A Novel Marketing Strategy?

A few days ago, Danii, a product designer, made a post on X that generated mixed reactions among crypto enthusiasts.

Danii proposed waiving gas fees on the Ethereum blockchain by letting users watch ads. That is, users would trade their time for the gas fees while the advertising brands get their ads in front of target crypto folks.

That seems like a brilliant idea and a win-win for users and brands. Is it? Considering that gas fee has been a thing on Ethereum, this idea sounds exciting, right? But there are various angles to this novel idea—the good, the bad, and the ugly. In this article, I'll explore them.

Whether you're a crypto enthusiast or a crypto marketing strategist, this article will help you understand:

• The idea of waiving gas fees for watching ads
• How watching ads to waive gas fees may work on Ethereum
• Potential benefits and drawbacks of this incentive and marketing strategy
• Ideas on what could make watching ads to waive gas fees successful.

What is a gas fee?

A gas fee is a transaction cost paid when using a blockchain network. This fee ensures a transaction is completed.

Let's assume you want to send 2 Ethers to a family member using the Ethereum blockchain. For this transaction to go through, you'll have to add an extra amount of Ether to the value you want to send.

This extra amount (gas fee) is determined automatically by the Ethereum blockchain network. And it’d serve as a reward to the validator who confirms your transaction.

For example, in the image below, $9,617.79 is the transaction amount. $6.29 is the gas fee for the transaction.

Where did the idea of waiving gas fees for watching ads originate, and what crypto projects have applied it?

The idea of waiving gas fees for watching ads on Ethereum became popular after Danii, a product designer, posted about it on X. The post was a fun one to entertain their crypto-focused audience.

Danii is known on X for posting questionable web3 designs. The post on watching ads to waive gas fees is one of such designs.

No brand has applied this marketing strategy, nor has the Ethereum Foundation considered it. It's still an idea, but some web3 enthusiasts seem excited about its possibility. In fact, as of the time of writing this, Danii’s post has over 518k impressions, making it one of their top-performing posts.

Why consider waiving gas fees for watching ads in the first place?

Ethereum gas fees can be unreasonably high. A surge in unconfirmed transactions on the blockchain causes a higher gas fee. That is, more demand leads to higher transaction fees. Gas fees can exceed the amount you plan to transact.

For instance, below is an aggrieved user charged $130 for a $4 transaction.

Source: Reddit

Sometimes, you may suffer a failed transaction without getting a refund for the transaction fees you already paid. Below is a post on Reddit by an "experienced" crypto user who lost $250 in a failed transaction.

Source: Reddit

For the above reasons, waiving gas fees for watching ads seems a good option for some users. So, whether transactions pull through or don't, you won't have to bother with unrefunded gas fees. You won't also have to worry about the fluctuating high gas fees.

Having analyzed this issue from the users' side, let's turn to the brands' point of view.

Personalized crypto ads targeting crypto users on decentralized wallets will be a great way to reach a niche audience. Advertising this way may yield a greater return on investment for crypto projects than using traditional means.

This marketing model is similar to advertising a new Lamborghini model to Lamborghini lovers in a car exhibition. That would be more effective than advertising the Lamborghini on TV where there may or may not be Lamborghini lovers seeing the ad.

Some crypto enthusiasts, including Danii, believe advertising on wallets would be useful to crypto brands.

Source: X (formerly Twitter)

How watching ads to waive gas fees may work on Ethereum

Here is a crucial question regarding watching ads to waive gas fees: how would validators earn a reward?

Ethereum validators earn gas fees as rewards for confirming transactions on the blockchain. When gas fees are waived for users, how do validators then earn a reward?

That brings us to how waiving gas fees could happen on Ethereum.

Ideally, this strategy will work best if Ethereum, in collaboration with decentralizedz wallets, initiates it. That said, crypto-focused projects who want to advertise would have to go through Ethereum.

Ethereum, through a dedicated smart contract, could develop a means to collect advertising fees. From the advert fee, validators get their reward.

What if there are no advertisers? What if the incentive is below the expectations of validators, and they decide to pull out from securing the network?

That leads us to the drawbacks and benefits of this marketing and incentivization strategy.

Potential drawbacks of waiving gas fees for watching ads on Ethereum

To be clear, I doubt if waiving gas fees to watch ads will work out on Ethereum. There are a few things wrong with the idea:

• Waiving gas fees for watching ads is a lazy way to solve the high gas fee on Ethereum. It's like trying to treat the symptoms of an illness instead of the illness. Ethereum's high gas fees should be solved from the root cause, not as an afterthought. And I'm not alone on this. See what a fellow crypto enthusiast, James Wong, said about it:

  
  

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Source: LinkedIn

• Waiving gas fees for watching ads will break down the incentive mechanism that secures the Ethereum blockchain. Once validators no longer get a good return on their investment, they'll move their business elsewhere. The result? Ethereum network will become less secure and more centralized.

  
  

• Ethereum already has a fair share of problems at hand. Think scaling, decentralization, and security. This marketing model could challenge these foundational elements in the long run and create more problems.

  
  

• High gas fees may lead to longer video ad duration. From Danii’s post, a gas fee of $6.29 has a 7-minute ad duration. So, a $100 gas fee would amount to over an hour of Ad duration. That is a long time for an ad.

  
  

• Gaming the system would be easy. Waiving gas fees should benefit brands who pay for ads and users whose gas fees are waived. But users can easily decide to play the ads and go about doing other things. They never get to see the ads, and the advertising brands never get to achieve their goals.

  
  

• Gas fees will fluctuate with time. Gas fees increase with an increasing number of transactions waiting to be processed. Imagine that you initiate a transaction, and you're required to watch a 30-minute ad to cover a $35 gas fee. Before you're done watching the ad, the gas fee may either have increased or dropped below the minimum required amount. When this happens, you either compensate by watching more ads, or your transaction never gets picked up for confirmation.

Potential benefits of waiving gas fees for watching ads on Ethereum

Although I have doubts about the feasibility of waiving gas fees for watching ads, if it works out, here are some benefits to it:

• Watching an ad of 7 minutes to get a free transaction worth $6.29 is a good return on time spent. At this rate, an hour of ads would be worth $53. $53 per hour is above the Oct. 2023 highest average hourly earning of $50.19 in the US.

  
  

• Removal of gas fees. This benefit is an obvious one that will favor users.

  
  

• Possible high conversion rate on Ads. Crypto ads advertising directly to wallet app users will be more effective than crypto ads advertising on the Internet. Why? Users on crypto wallets are closer to converting since they understand crypto already.

  
  

• This strategy could attract more users to the Ethereum blockchain. The high gas fee on Ethereum is one of the reasons users prefer cheaper blockchains. When these same users learn that Ethereum, one of the most secure blockchains, waives fees, they may decide to try it out.

What could make waiving gas fees for watching ads on Ethereum successful?

If you're willing to give this strategy a shot as a builder, you need ideas on what may work. Here are my two cents on that:

• Waiving gas fees on Ethereum should be optional. Not all users would like this strategy. For example, a crypto whale transacting 10,000 ETH would prefer to pay for the gas and get a fast transaction. Everyone should have an option to choose.

  
  

• Seven minutes of ad time is a long one. Shortening it to seconds or a few minutes is best. A report from the Content Marketing Institute shows that the optimal video ad length should be 1 minute to 3 minutes. Only desperate users may watch video ads for minutes or even hours.

  
  

• Gas fee waiving should have a threshold. Beyond this threshold, you'd pay for the rest of the gas fee as a user.

  
  

• Gas fee waiving should be partial. Complete waives may not be sustainable in the long run.

The bottom line

Watching ads to waive gas fees on Ethereum seems like a brilliant idea to solve the high gas fee challenge, but it’s not. Implementing this strategy may shake the foundational elements of the Ethereum blockchain. Such elements include security, decentralization, and scalability.

High gas fees should be solved by tackling the root causes rather than the symptoms. Waiving gas fees for watching ads is trying to tackle the symptoms instead of the causes.

Although watching ads for gas fee waive may be beneficial, it may not be worth the challenge it’d cause the Ethereum ecosystem in the long run.