Web3 Gas Fees Are Preventing Mass Adoption More Than You Realize

If you are a Web3 veteran and have been in the space for years, then the concept of gas fees is no surprise, but is instead the backbone of how decentralized platforms fund their functionality.  This is well and good, but it puts blinders on the Web3 community and could cause you to miss the mindset of the average Web2 user.

In economics and marketing, we have discovered that there is a magical barrier between free and “not free,” especially when it is online.  If you are charged $1 for a service, then charged $2, you might see that as an increase of $1, right? 

If you are charged $3, that is another $1 increase, and it feels like a $1 increase.  But what if you are currently not being charged anything, but are then charged $1, the effect is much different.  Instead of feeling like a $1 increase, there is an emotional component to it that causes many people to reject the charge and give up the service.  Is it rational?  No.  Is it human and very real?  Absolutely.

This was especially seen in Web2 as some services began charging for what had once been free.  Their thought was to charge a very small amount so that happy customers would be fine paying. 

What they found was that the emotional component of paying for something that had been free, along with the administrative effort (and trust) to include payment information, caused many customers to leave, even if they had enjoyed the service and could easily afford the fee.

Interestingly, one way to greatly soften this blow was to create a limited-feature-free version and then a more feature-rich version that charged a fee. This is known as the Freemium model, and we will come back to this.

Gas Fees Are Non-Zero, and Therefore A Problem

Let’s cut to today, where Web3 continues to build up use cases and a full ecosystem of services.  Those using Web3 understand that because of the different architecture of Web3, including its decentralization, the concept of gas fees is needed to power the system (hence the name). 

You might say that if someone from the Web2 world joins, the gas fees won’t seem like going from “no fees” to fees because they haven’t used Web3 before.  Unfortunately, that’s not how the human mind works. 

People see the world in terms of problems they are working to solve.  An online service is something that can help you solve a particular problem.  Web3 is the same, and every Web3 service aims to solve a problem you might have. 

The challenge here is that these problems aren’t new; it’s just that Web3 is solving them in a way that Web2 can’t.  That doesn’t change our human mindset though, and for a Web2 user looking to enter the world of Web3, they see that suddenly many of the services that used to be free in the Web2 world are all now “not free”, which creates a major roadblock in their willingness to pay for them. 

Because of this, a Web2 user who has been curious enough to explore what Web3 can offer might abandon the journey before it begins.  This is a very real problem, and it doesn’t matter if the gas fees are miniscule;  unless they are zero, they create an issue.

Freemium as One Solution

As mentioned before, converting a service that you need to now charge for is difficult, but one proven way to help this transition is by splitting it into a paid model with all the features, and a limited model that is still free. 

This creates a choice for users, which can more easily allow users to start with the free model, realize the missing features are worth paying for, and make the step.  Web3 could offer this, but only if the gas fees can be controlled and managed. 

Fortunately, there are a handful of platforms working to make this a reality.  The most prominent is likely Aurora, with its “Gas Management Configuration” feature.  It can do this because the network is set up as Virtual Chains, which gives the chain owners significantly more flexibility in setting up, something that couldn’t be offered for a large network like Ethereum.  

Using a customizable gas management system, Web3 platforms could easily create a split service freemium model, charging gas for all features while still offering the ever-important free model for customers not ready to cross that payment threshold.

Taking Gas Management Further

Looking at the concept further, what you could do with a customizable gas fee system is interesting.  For those willing to pay a small gas fee, that fee could be increased slightly for full-featured service to pay for the free users. 

Alternatively, a slightly higher than required gas fee could help fund infrastructure projects or just be counted as extra revenue.  For critical features that need full participation, such as DAO activity and voting, gas fees could be suspended to ensure the community is able to get involved fully with the management of the platform.

Looking Ahead

It’s absolutely critical for Web3 platforms to understand their audience, and this includes the Web2 crowd that might be ready to experiment with Web3.  To finally gain mass adoption, this process needs to be as smooth as possible, and the giant barrier of gas fees will be a sticking point for a long time. 

The members of the Web3 community need to think about these types of issues and make full use of customizable gas management solutions.  Platforms can be smart about this by using strategies like a Web3 freemium model to smooth that onboarding for new users while managing fees on the other side to ensure all costs are covered.  The more users that adopt Web3, the more the concept of gas fees will make sense to them, but there will always be advantages to managing gas fees to match a platform’s needs.