{"id":7298,"date":"2022-01-27T14:55:06","date_gmt":"2022-01-27T14:55:06","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/27\/what-are-ethereum-eth-gas-fees\/"},"modified":"2022-01-27T14:55:06","modified_gmt":"2022-01-27T14:55:06","slug":"what-are-ethereum-eth-gas-fees","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/27\/what-are-ethereum-eth-gas-fees\/","title":{"rendered":"What Are Ethereum (ETH) Gas Fees?"},"content":{"rendered":"

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If you\u2019ve been looking into Ethereum or Ethereum-related things such as NFTs<\/a> (non-fungible tokens) or smart contracts<\/a>, you\u2019ve probably heard of the Ethereum \u201cGas\u201d fees required. These fees must be paid to make Ethereum work, and here\u2019s why.<\/p>\n

Transactions Cost Money<\/h2>\n

Ethereum is a cryptocurrency, which means that people can buy and sell things with it. It\u2019s also possible to run complex code on the Ethereum \u201cblockchain,\u201d which is how NFTs and smart contracts are possible.<\/p>\n

However, all of these transactions and operations need computer hardware to process them. That computer hardware costs money. Unlike a centralized bank, there is no data center full of computers dedicated to crunching the numbers. All of the processing power used to make and verify transactions using Ethereum is donated by miners<\/a>.<\/p>\n

Gas Makes the Ethereum Blockchain Go<\/h2>\n
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When you pay the \u201cgas\u201d fee on top of the transaction itself, that\u2019s the amount of currency with which the miner will be rewarded for providing the computing power needed to complete the job. The more effort it takes to complete a transaction, the more you\u2019ll have to pay.<\/p>\n

Gas fees aren\u2019t just there to pay for the computational power needed to power the Ethereum blockchain, it\u2019s also a way to protect the network from being flooded with malicious transactions aimed at congesting things.<\/p>\n

Since each transaction costs money, it makes it unlikely that the network will be spammed because it\u2019s too expensive to do so.<\/p>\n

Gas Fees Fluctuate<\/h2>\n
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That being said, computational power is a limited resource, which means that the law of supply and demand affects how much gas you need to pay to complete a given transaction. When the network is busy with lots of requests for transactions, users are essentially competing with one another to get their transactions verified first. This \u201cbids up\u201d gas fees on the network, making the cost of doing business higher.<\/p>\n

This is why some Ethereum users reserve their transactions for weekends or certain times of day when activity is low, to push their transactions through at a lower price.<\/p>\n

The more complicated an operation, such as executing a transaction or \u201cminting\u201d and NFT, the more gas it costs. During peak times these types of transactions can become truly expensive. Some platforms let you set a gas fee level you are comfortable with and will only execute when prices drop low enough. The tradeoff is that you\u2019ll have to wait an indefinite amount of time before your request is fulfilled.<\/p>\n

Gas Is Measured in \u201cgwei\u201d<\/h2>\n

While gas fees are paid to miners an Ethereum, that\u2019s not the unit used to measure gas fees. Instead, gas is measured in \u201cgwei\u201d. Gwei is short for \u201cgiga-wei\u201d. A gwei is equal to 0000000001 ether (ETH) which is also worth 1,000,000,000 wei. A single Wei is the smallest possible unit of ether.<\/p>\n

So when you see gas prices, don\u2019t have a heart attack! That\u2019s gwei, not pure ether.<\/p>\n

Understanding the Ether Gas Limit<\/h2>\n

The ether gas limit is the maximum amount of ether that a transaction can consume.\u00a0 Users can set a gas limit which ensures that no more than that amount will be used for the transaction. There is a risk involved in setting your limit too low, since your transaction could be rejected if its limit is below the minimum the miner is willing to do the transaction for.<\/p>\n

The gas limit for a standard transaction (just buying or selling something with ETH) is 21,000 units. Smart contracts and NFTs can go much, much higher. If you set your gas limit higher than the transaction actually used, you\u2019ll simply be refunded the difference. If, on the other hand, if you\u2019ve set it too low, you run the risk of losing that amount of ether and having your transaction fail.<\/p>\n

Estimating how much gas your non-standard transaction will need isn\u2019t an exact science. This is why users often look at what such transactions usually cost (or are being charged at the time) and then tack 50,000 or 100,000 units on to that just in case. Remember that there\u2019s no risk to setting your limit too high.<\/p>\n

In late 2021, the Ethereum blockchain underwent a \u201chard fork\u201d referred to as the London Upgrade<\/a>. Changes made to how fees are calculated in this upgrade are meant to smooth out gas volatility and make predicting costs easier. Only time will tell if that\u2019s actually the effect it will have. Either way, if you want to use Ethereum, you have to play the gas game.<\/p>\n

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