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What are the ethereum gas fees?


 What are the Ethereum gas fees??!

eth, eth gas fees , transaction fees gwei

Every user on the Ethereum network must pay a gas price to perform any function.

There is no such thing as a free lunch, and it definitely isn't a free transaction. Imagine spending $100 to mail $500 or receive a PNG of a penguin, if spending $5 to receive $20 at an ATM is inconvenient.

While this may appear to be an extreme example, it is sometimes necessary to do so to execute a transaction or perform a function on the Ethereum network. Moreover, unlike ATM costs, the Ethereum network will not reimburse you for your gas fees at the end of the month.

What is Gas?

Gas is the term used for the amount of ether (ETH), the native cryptocurrency of Ethereum, that the network needs for a user to interact with the network. These fees are used to compensate Ethereum miners for the energy required to verify a transaction and to provide a layer of security to the Ethereum network, making it very costly for malicious users to spam the network.

While they are an effective way to encourage miners to verify transactions and maintain network security, gas fees are still the most hated part every user has about Ethereum. People hate gas prices not only because they generally underestimate them, but also because they can be ridiculously expensive when the network is congested.

So let's take a look at what can make gas fees so expensive and what simple steps you can take to save money while interacting with the Ethereum ecosystem.

How are Gas Fees Calculated?

To understand why gas fees are so expensive and how you can save money on them, it's important to understand how they are calculated.

Since fees in Ethereum are typically well below 1 ETH (although sometimes it doesn't feel like it), Ethereum uses a metric unit system called "wei", where 1 ETH equals 1 quintillion wei. (A quintillion is a number followed by 18 zeros.) One of the most common denominations of wei and used to represent gas charges is the gigawei (gwei), or 1 billion wei. So, when you check a gas tracker and see that the average gas for a transaction is 100 gwei, that means you should expect to pay a base fee of 0.0000001 ETH for a particular transaction ($0.00031 at press time).

If you've previously created a non-tradable token or purchased one from a secondary market like OpenSea, you might think that 100 gwei sounds like a bargain for an NFT transfer. In fact, base wages are only one part of the total wage structure. Following the adjusted gas fee structures introduced by the Ethereum London upgrade, the total fees are calculated as follows:

  • Gas Units (Limits): This is the maximum amount of gas you want to spend on a transaction. While you can adjust the cost of your gas operation, it's important to do this carefully. This is because different types of interactions with the Ethereum blockchain require different amounts of gas to complete.
  • Basic fee: This is the minimum amount of gas required to include a transaction on the Ethereum blockchain. The amount of gas needed for the base tariff is determined by the transaction inclusion request, regardless of the transaction type. Since the base rate is a demand factor, it dynamically adjusts based on the number of users interacting with the network at any given time.
  • Tips: Tips, also known as priority fees, are additional fees to make your transaction complete faster. These fees are better known as tips because they provide an economic incentive for Ethereum miners to confirm your transaction before others. When a miner validates a priority-paid transaction, they receive these fees as tips. Because miners can see which transactions contain tips, they will prioritize completing a transaction with the highest tip to earn the most money possible.
Note that if you set your gas unit limit below the amount of gas required to complete your interaction, your transaction will be canceled but you will not be able to get your gas fee back. This is because the miner has already done the equivalent amount of work to execute your transaction and is charged for it even if the transaction does not occur.
To illustrate the total fee formula, let's say I want to send you 1 ETH and the average amount of gas required to transfer ETH on the Ethereum network is 23,000 gwei. I would set this as my gas limit. Currently, the minimum amount of gas (basic fee) required to submit the transaction is 150 gwei, but I want it to reach you faster so I'm adding a tip of 20 gwei to the transaction. In this case, our total wage formula would look like this:

Total cost to send you 1 ETH = 23,000 gwei * (150 gwei + 20 gwei)
Then the total fee would be equal to 3910000 gwei or 0.00391 ETH (about $13 at time of printing). This means I will send 1.00231 ETH to the Ethereum blockchain and you will get 1 ETH to buy some cool JPGs.

Why do gas fees cost so much?

We can better comprehend why gas prices are so expensive if we understand how total gas fees are determined. The following are the two main variables that have driven recent increases in gas prices:

  • Gwei is the unit of measurement for gas fees.
  • The total fee calculation for Ethereum is changeable.
  • Because the price of ETH is more expensive, gas fees will be more expensive
  • Gas fees cost more because base fees cost more
  • High transaction and congestion on the network

How to avoid paying high gas fees?

While there is no way to avoid paying for gas when utilizing the Ethereum blockchain, there are various ways to make it less expensive.

  • Pick the right time and be patient when are considering buying.
  • Set a max fee limit on your transaction.

Layer 2 scaling solutions

Finally, with an Ethereum “layer 2 scaling solution” you can spend less gas interacting with the Ethereum blockchain. Scaling tools are extensions of the Ethereum network that aim to increase transaction speed and the number of transactions that can be processed per second. Some popular examples include Arbitrum, Loopring, and dYdX.