Reduce High Withdrawal Fees on Binance by 50%
With the growing interest around cryptocurrencies, many have already made their first experiences with the digital money. The large number of new users has also led to an increase in transactions. Ethereum is (still) known for the fact that not many transactions per second are possible. A combination of few possible and many pending transactions caused the network fee to skyrocket. Well, you had to accept the high fee if you wanted the network to process the transaction in this century. Supply and demand at its best. Binance has stepped it up a notch: To withdraw tokens like USDT and USDC via the Ethereum blockchain ERC20, you pay more than double the already high network fee. This post shows a simple trick how you can avoid the high withdrawal fees on Binance.
The network fee for the ERC20 blockchain is dynamic and dependent on the number of pending transactions per second. Since the London upgrade of the Ethereum Blockchain, the problems around the exorbitant fees have been somewhat reduced and the fees incurred have been made more predictable for users. With the Eth2 upgrade, which officials say is coming in 2022, the blockchain will be able to handle thousands of transactions per second, which will have a favorable impact on network fees. A more detailed explanation of how the ERC20 blockchain calculates transaction fees can be found here: Gas and Fees (ethereum.org)
How high are the withdrawal fees on Binance really?
If you want to withdraw USDT on Coinbase, for example, you only have to pay the network fee. Coinbase itself therefore collects no or only a very small fee.
Depending on the amount you want to transfer to another wallet, 7.1 USDT is already a lot. Imagine you want to transfer 100 USDT and pay 7.1% as a fee 🤯. Note: The network fee on Coinbase fluctuates enormously, as it depends on the number of transactions currently being processed. In another trial, it was only 3.1 USDT.
And what about Binance?
The situation is much more dramatic on Coinbase’s big competitor. If you want to transfer 100 USDT to another wallet, you’ll be virtually slain by the high withdrawal fees on Binance.
If you transfer amounts larger than 10’000 USDT, 24 USDT may not be much. Nevertheless, it hurts to pay a fee of 24% when transferring 100 USDT. Overall, the fees for trading on Binance are actually rather low in comparison. However, I assume that Binance did not necessarily introduce the high withdrawal fees directly as a source of income, but rather to keep as much money on the platform as possible. More money on the platform means more liquidity and more trading activity, which leads to more revenue. In addition, Binance wants to push the use of its own blockchain (BSC).
Intermediate transaction via Binance Smart Chain
We take advantage of the fact that the trading platform wants to push the use of its own blockchain to reduce the high withdrawal fees on Binance. If you select the Binance Smart Chain in the withdrawal dialog, you will see that only 0.8 USDT transaction fees are charged.
If you now want to transfer your coins to a wallet that supports the Binance Smart Chain, then go ahead: nothing stands in the way of low fees. However, many wallets do not offer transactions via the BSC blockchain. It is not surprising that Coinbase, for example, does not want to support the competitor’s network. So, if you want to transfer your USDT to Coinbase, they will inevitably have to come in on the Ethereum Blockchain. That’s why we do an intermediate transaction.
Pionex reduces your high withdrawal fees on Binance
Now, to reduce the high withdrawal fees on Binance, we make an intermediate transaction to a platform that supports both blockchains. Pionex is one of these platforms. It offers a variety of trading bots, but can also be used for manual trading.
Create your account on Pionex here
and benefit from the lowest trading fee of 0.05%.
Of course, there are various other platforms that support both blockchains. However, since I personally use Pionex very often, its use for the reduction of the high withdrawal fee was obvious for me.
The chart shows that a transfer to Pionex via the Binance smart chain and the subsequent transaction to Coinbase via the Ethereum blockchain only incurs 10.8 USDT. Depending on the current utilization of the ERC20 blockchain, the fee may be even lower. Comparing this to the alternative of a direct ERC20 transfer from Binance, a reduction of 13.2 USDT is evident. Why should you throw money out of the window when it can be done cheaper?
And now that we’ve already talked about Pionex, how about starting a low risk trading bot? Pionex Arbitrage Bot: Your Smart Investor