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28 May, 2024

How to Calculate the Cost of Smart Contract in 2024?

Smart contracts are an integral part of the Ethereum blockchain. This technology provides users with the possibility to create unique digital agreements. These contracts can execute their terms automatically without the involvement of third parties. According to Industry Research, the global smart contracts market size is expected to reach $1460.3 million by 2028.

The evolution of blockchain technology significantly contributes to the growing popularity of smart contracts. At the same time, many companies still don’t use them due to the lack of knowledge about this innovation. Moreover, they may face significant issues while trying to calculate the cost of deploying smart contracts.

Thus, today, you’ll discover the answer to the question: “How much does it cost to create a smart contract?” This article includes useful tips and important information related to various factors from development costs to gas fees.

The Step-By-Step Process of Smart Contract Creation and Deployment

If you want to create a smart contract on Ethereum’s blockchain technology, then this process requires a developer who knows how the platform works well enough, so they can create something unique while still following its ruleset. Furthermore, a thorough understanding of the whole process helps make a more precise smart contract cost estimatedeploy smart contract_LITSLINK

Step 1. Define your business idea. This can be done either in-house or with the help of an outside consultant. You should get a good understanding of what problem you’re trying to solve, who your target audience is, how much money they have, and how much time they will spend on the smart contracts platform.

Step 2. Next comes creating a token template for your dApp that has all the basic functions needed by users (e.g., transfer tokens from their accounts).

Step 3.  Once this is done, compile it into byte code using Solidity Compiler (solc), which outputs one file called “contracts.”

Step 4.  You then need to execute smart contract deployment on Ethereum Testnet where they will be tested before the transfer onto the main Ethereum network where actual funds are involved. At this point, we recommend using Truffle because it provides easy integration with testing frameworks such as Jest or Mocha.

Step 5.  The next step involves creating basic user interface (UI) components, so people can interact with them directly without knowing anything about crypto programming languages like JavaScript, C++, Rust, or Python.

Development Nuances: How Much Does a Smart Contract Cost?deploy smart contract_LITSLINK

Smart contracts are an essential part of any blockchain development project. They help developers create decentralized applications (dApps) with complex logic and they also allow users to make transactions without the need for centralized organizations. Moreover, it’s possible to create smart contracts for multiple parties, designing specific requirements for each participant of the digital agreement.

However, smart contracts aren’t cheap — in fact, they’re often a major cost factor in a dApp’s budget. So, what is the estimated cost of a smart contract development?

We have put together a detailed list of the most common factors that affect the cost of deploying smart contracts. Hope it will be helpful for you to understand what goes into calculating your budget and to make an informed decision about how much money you should allocate for this project.

Project complexity

The more complex your smart contract is, the more expensive the deployment cost is. It takes time and effort for engineers to understand all the needed features, so they can make sure that everything works properly and safely within an ecosystem that has already been built in another language or platform (e.g., Ethereum).

Also, if there are many moving parts involved in any given function—such as transferring funds from one address to another—then you should expect some delays during testing because there may not be enough resources available.

Maintenance and post-delivery services

The estimated cost of the project’s maintenance depends mostly on the number of changes you want a smart contract development company to make to your project. The following factors are also considered:

  • How complex is your smart contract? This can vary based on your business needs, but if you have a highly complex smart contract with multiple callbacks, it will be more time and money-consuming than the one that doesn’t require all those extra steps and actions. This is where your smart contract development cost may increase several times.
  • Does your codebase match industry standards? How well does it work with other popular programming languages? While most developers are aware of best practices when building their own products, there’s no guarantee that all coding standards were followed during development or that they’ve been maintained over time as new features have been added. This could lead to problems down the line when trying to integrate with other systems within an organization, and this will likely increase the deployment cost associated with fixing such issues before launch.

Note: Even if your codebase is in line with industry standards, it may not be very user-friendly. This could mean that it’s difficult to read and understand what certain functions do or how they interact with each other.

The number of people involved in your project

The complexity of your idea forms the team required to implement it. This is why it’s impossible to calculate the exact smart contract development cost before a consultation with a trusted service provider.

The size of the team that is working on your project influences the overall cost as strongly as the technologies applied. By the way, the more people — the more time it will take to complete and the higher the chance of mistakes being made.

In addition to this, if you have multiple non-teammates working on your smart contract deployment simultaneously, then this is also likely to increase costs due to their need for additional coordination with each other.

Tool kit and specific technologies

The used tools also play an important role in the calculation of a smart contract development cost. Blockchain technology is changing every day, and this can affect your project’s estimated cost. For example, if you have a large team working on a complex idea with multiple developers using different programming languages, then this will increase the base cost.

If you’re looking for a solution that works with your existing technology stack, it may be more suitable to use one of these two frameworks: Ethereum or Hyperledger Fabric (which is based on Bitcoin). They offer templates for developing applications such as tokens and digital assets.

Here are some examples of technologies and tools required for smart contract creation and deployment:

  • Ethereum is a blockchain-based smart contracts platform, which means that it’s a decentralized virtual machine that runs on the Ethereum network. It uses a proof–of–stake (PoS) consensus mechanism for processing peer-to-peer transactions without intermediaries. It’s also used for deploying smart contracts, which are self-executing computer codes that use blockchain technology to facilitate the exchange of money or assets between parties transparently.
  • Solidity is one of several languages used to write Ethereum smart contracts (the others being Serpent and LLL). It’s based on JavaScript, one of the most popular programming languages in use today.
  • Web3JS is an open-source JavaScript library created by ConsenSys that can be used to interact with various components on any Ethereum node running on a local or remote machine via JSON RPCs over HTTP. You can use Web3JS to interact with smart contracts, send transactions, read from the blockchain, and so on.
  • Truffle is one of the most popular Ethereum development frameworks, which is used by many engineers for smart contract deployment. It provides a suite of tools that can be used during the development, testing, and deployment phases. Using Truffle, developers can write tests for various functions within their smart contracts using Mocha and Chai; they can also use Solidity-specific test frameworks such as TestRPC or Ganache.

Summing up all the nuances, we can state that the creation process is time and money-consuming enough, so it can’t be cheap. The base cost you can find on the Internet starts at $7000 and reaches $50000. Furthermore, overly complex projects may be estimated even several times higher. By the way, we haven’t taken into account the cost of deploying a smart contract yet. So, let’s proceed to the next paragraph.

What to Consider While Calculating the Cost of Deploying a Smart Contractdeploy smart contract_LITSLINK

The sum users spend for deployment varies from $500 for basic contracts to $5000 for more complex ones. So, answering the question “How much does it cost to deploy a smart contract?”, we have to mention the list of factors that influence the final budget.

Gas fees

Gas fees are paid to the Ethereum network in ether. They are taken from a user’s account when they interact with a smart contract, charging for every operation, transaction, or function call within a smart contract.

Considering the high value of ETH, gas prices are usually estimated in gwei. One gwei is equal to 0.000000050 ETH. Also, gas prices are highly volatile. It means that you should always check out crypto trackers to know exactly how much you’ll pay. As a rule, gas prices depend on the amount of traffic and network computational power. 

When calculating gas costs for your own smart contracts, consider the following questions:

  • How many functions does this contract have?
  • Can you break up your contract into multiple smaller ones with fewer functions?
  • How many transactions will be run at once? 
  • How long is the execution time of each transaction?
  • What is the gas limit you are willing to spend on a transaction? 

So, how many gas fees will be charged for a transaction? This is determined by the amount of computation required to execute a transaction. The more complex your contract is — the more gas it will need. Plus, transaction fees may be different even for the same contract. As a rule, they vary depending on the network congestion when you execute a smart contract.

It’s important to consider that it’s still possible to lower a gas cost by following several lifehacks. For instance, you can simplify and optimize the procedures of your smart contract and opt for more efficient algorithms. Also, you can reduce a gas cost by moving your project to a blockchain with lower gas prices.

Creation of your contract

The base cost for the creation of a smart contract, according to Ethereum’s yellow paper, is about 32000 gas. Nevertheless, the final cost of the smart contract deployment depends on the following:

  • Size of the deployed code (in bytes). The size of your smart contract will be proportional to how many lines need to be added, deleted, or modified during development or deployment processes.
  • Number of transactions going through a single call or event. Each transaction increases bytecode size slightly because there is some metadata associated with every line added, deleted, or modified.

Although it’s possible to find a smart contract development company ready to help you for nearly $500, the price may reach even more than $5,000. The deployment costs directly depend on the complexity of the project.

Contract storage

Storage is the amount of space your contract takes up on the blockchain. It’s paid for in gas, and that cost is passed on to whoever creates or uses your contract. According to Ethereum’s yellow paper, the smart contract platform charges 20000 gas for 256 bits.

Storage costs are split between two parties: the creator of a contract, who must pay its initial memory size; and anyone who uses it, which includes anyone sending transactions to or reading information from that contract.

Contract execution

When you execute a smart contract, you pay for the execution of each instruction. The gas fee for each instruction is usually expressed in Wei (1 Ether = 1,000,000,000 Wei).

Contract execution costs are paid when calling functions or methods within an existing smart contract. This happens when using external libraries or interacting with other contracts as well (for example, if one or more parties use a peer-to-peer messaging service). 

Gas is used for every operation performed on a blockchain network—not only for executing smart contracts but also to pay for translation costs and storing data on-chain. As such, it’s important to keep track of your current gas price so that you know how much money is being spent during each interaction with Ethereum’s network.

Examples of Successful Blockchain Smart Contracts Usage

The modern IT industry goes hand in hand with blockchain technologies. Smart contract development can significantly boost any online startup, ensuring better customer experience and efficiency.

It’s often combined with other exciting innovations, such as cloud computing and AI, to ensure extra storage space, better customer retention, etc. Here, you can get acquainted with some exciting projects based on the Ethereum Virtual Machine and its blockchain’s smart contracts.

CryptoKitties

This NFT project uses smart contracts for the creation of special digital assets. In this game, they are represented by cats. Users can breed, collect, and trade them. Despite a number of problems related to bugs and insufficient funds, this project is still one of the most successful startups that use the Ethereum smart contract technology.

Horizon State

Smart contract creation is often used during the development of modern decentralized governance projects. Horizon State is an innovative platform that offers access to secure and verifiable digital systems.

Decentraland

This project demonstrates what happens when a smart contract deployment, exciting gaming experience, and NFTs are combined in a single unit. It provides users with the possibility to create and explore digital worlds. Each player can improve their land to trade it, making a profit.

How to Choose a Service Provider for Smart Contract Developmentdeploy smart contract_LITSLINK

When developing a smart contract, it’s important to choose the right service vendor that both understands your business needs, knows the required technology and offers appropriate solutions at acceptable prices.

  • Make sure that your chosen service provider has experience working with Ethereum-based blockchain networks and understands Solidity (the programming language used by Ethereum).
  • Ask them about their security measures: how they store private keys, what they do to prevent phishing attacks, etc.

It’s also a good idea to do some research on the blockchain developer team. Check their websites and LinkedIn profiles to see what other projects they’ve worked on. If possible, speak to someone who has already collaborated with the company and ask about their experience and impression. 

Of course, the skill of your future team of developers influences the cost to deploy smart contracts, but it also eliminates potential risks. For example, an Ethereum-based cryptocurrency called CryptoKitties had a bug where users could buy two cats at once — and they did! This caused the entire network to crash due to high demand and insufficient capacity, resulting in over $20 million worth of lost Ether that day ($15 million just from one person).

Conclusion

The cost of implementing smart contracts depends on many factors, but the most important among them is your business needs. One more essential thing to consider is its potential complexity. As a general rule, the more lines of code you have in your smart contract, the higher it costs to create such. Plus, don’t forget to consider Ethereum’s network congestion, which may also significantly increase the fees you’ll need to pay for your contract execution.

This is because there are many ways for developers to save money on their projects by using existing tools and technologies rather than developing from scratch. For example, if you’re using an open-source tool like Truffle or Remix instead of writing all the code yourself, then that will significantly reduce costs at every development and deployment stage along the way (from initial planning through testing).

Nevertheless, only capable and trustworthy engineers can consider all the peculiarities of your project. Contact LITSLINK — the top blockchain development company — to accurately estimate your project and implement it with no flaws.

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