If you’re looking to send USDC from one platform to another, you may have noticed that the fees can go all the way up to 52 USDC for a single transaction!
This is a really huge sum, and it will only make sense if you are withdrawing a large sum of money.
Why are the fees so high, and is there a way to reduce them?
Here’s what you need to know.
Why are the fees to send USDC so high?
USDC is a native ERC20 token, hence the main method of sending USDC will be via the ERC20 network. Due to the congestion on the ERC20 network, the fees to send USDC are high to incentivise the miners to process your transaction first over other transactions.
If you’re trying to understand how Ethereum gas fees work on the ERC20 network, you can check out the video below by Whiteboard Crypto.
The Ethereum network has many decentralised applications (dApps) that are running on the network. This means that there will be many transactions that need to be processed at any point in time.
However, there is a limit to the block size of each block on the Ethereum network. This may result in some transactions not being processed due to this limit being present.
There is a priority fee (or tip) that was being introduced to Ethereum after the London upgrade.
This means that it is possible to have your transaction preferentially processed over other transactions, if you are willing to pay a higher transaction fee.
For reference, here are the USDC withdrawal fees charge on some platforms if you’re using the ERC20 network:
Most of these fees can be very high, so it will only be worth it if you are sending a large sum of money.
Some exchanges like FTX and Huobi charge a dynamic fee for withdrawing cryptocurrencies. As such, the fee that you’ll pay depends on the network congestion at the time that you are intending to withdraw your funds.
I personally do not like this unpredictability, so I would prefer to use another platform to make the withdrawal.
How can I reduce the fees for sending USDC?
To reduce fees when sending USDC, the best way will be to buy USDC on an exchange that charges the lowest withdrawal fees for ERC20 transactions. Alternatively, you can send USDC via another network (e.g. Binance Smart Chain or Solana) where there is less congestion and the withdrawal fees are cheaper.
If you are intending to buy USDC with the intention to send it to another platform such as Blockfi, it would be best to double-check the withdrawal fees that you’ll incur when sending it over the ERC20 network.
Here are 3 main methods for you to reduce withdrawal fees when sending USDC:
- Send USDC via an exchange that has the lowest withdrawal fees
- Stake FTT on FTX to obtain free ERC20 withdrawals
- Use an alternative network besides ERC20 to send USDC
Sending USDC via an exchange that has the lowest withdrawal fees
Currently, the cheapest way of sending USDC to another ERC20 address is by using AAX.
This will greatly help to reduce the fees that you incur, as other platforms charge quite a bit for ERC20 withdrawals of USDC.
You can stake FTT on FTX to obtain free ERC20 withdrawals
However, you will need to stake a minimum of 25 FTT to be able to enjoy 1 free ERC20 withdrawal per day.
This can be quite a large amount of money, depending on the price that you buy FTT at!
As such, this may only be a good strategy if you are intending to use the FTX Exchange for the long term.
You may want to note that only the FTX Exchange has USDC on their platform, while the FTX App does not!
You can use an alternative network besides ERC20 to send USDC
If you would like to use an exchange that has high ERC20 withdrawal fees, an alternative way to send USDC would be by using another network instead of ERC20.
For example, some platforms like Binance allow you to withdraw USDC using other networks, such as:
As you can see from this picture, the withdrawal fees using these networks are much cheaper (~ 1 usdc) compared to withdrawing using the ERC20 network!
However, when you are sending USDC via any of these networks, it is important that the platform that you’re sending to supports these networks as well.
For example, Nexo and Kraken only support ERC20 deposits of USDC, and not via other networks. You can check out my guide on how to withdraw from Binance to KuCoin using the TRC20 network to view the process.
It would be good to check the deposit address of USDC on the platform that you’re withdrawing to, and to see if they support other networks besides ERC20.
For example, here are the networks that are supported on KuCoin:
It will be good to double-check that you are able to use the same network for both the platform you’re withdrawing from and the one that you’re withdrawing to.
For example, if you send USDC via the Binance Smart Chain (BEP20) to an ERC20 deposit address, there is a chance that your crypto may be lost forever!
I Transferred $100 SGD To The Crypt...I Transferred $100 SGD To The Crypto.com App [GUIDE]What is the cheapest way of sending USDC?
The cheapest way to send USDC via the ERC20 network is via AAX, which charges the lowest fees for ERC20 withdrawals compared to other platforms. Alternatively, it is possible to send USDC via other networks (e.g. Polygon, SOL or TRC20) where the withdrawal fees are much lower.
Sending USDC via the ERC20 network can be very costly, due to the high amount of congestion that is on the network.
This is similar to the withdrawal fees that you’ll encounter when withdrawing USDT.
To reduce your fees, the best way would be to find a platform that charges low ERC20 withdrawal fees, such as AAX.
Alternatively, you can use another network apart from the ERC20 network to withdraw USDC. Due to lower congestion on these platforms, the fees will be much lower.
However, don’t forget to check that the platform that you’re withdrawing to supports this alternative network (e.g. BEP20 or SOL)!
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