Ethereum gas explained

[Bitcasino.io 462]

Hi guys,

 

Do you know what Ethereum gas is?

 

Ethereum gas is a unit that measures the cost of computational effort such as completing a transaction or executing a smart contract. Priced in small denominations of Ether (ETH) called gwei, gas is used to allocate resources to the Ethereum virtual machine so contracts can self-execute easily. 

 

Everything you do in the Ethereum network costs gas and this gas translates to ETH.  The Ether value will show the actual incentive a miner gets in exchange for completing a transaction within the network. Hence, gas is what miners consider when choosing whether or not they’ll do the computational work.

 

As the one who’s requesting for computational work, you set the gas price to show how much you’re willing to pay for the requested work. The amount of gas you need depends on two major factors:

 

* The complexity of your contract
* The speed you want it finished

 

If you’re willing to wait longer for a transaction to be completed, you can pay less gas. If you want the transaction to be completed as soon as possible, then you’ll need to pay more gas.

 

Why does Ethereum use gas?

 

 

Like any other network, Ethereum is vulnerable to overloading because of heavy usage and high traffic. Each operation requires a number of gas units to complete a transaction. The network can only compute a limited number of operations at a given time, and if left unattended, the number of requests can overwhelm the system and overload it. 

 

Miners get to pick which transaction they want to work on. However, as there are so many offers on the network,  it’s hard for miners to choose. As a result, the network gets flooded with requests and time is wasted. 

 

To manage traffic and prevent the network from overloading, the gas system that consists of gas price and the gas limit was created. Instead of choosing at random, miners now rely on a user’s set gas price and gas limit to pick which transaction they would like to work on. This helps miners decide how to prioritize their work and optimize their working time.

 

The gas shows the incentive the miner will receive in exchange for their service. The more complex the transaction, the more time it’ll take to complete. As a result, fees are higher to compensate for the intensive work. The opposite goes for simple transactions.

 

All in all, the use of Ethereum gas can be summarized in these points:

 

1) Keeps the network from overloading by allocating resources
2) Helps miners decide how to prioritize their work
3) Keeps transactions from being too expensive

Gwei, gas limits and gas price

 

 

In understanding Ethereum gas, you have to know about its three main aspects: gwei, gas limit, and gas price. The transaction cost is the result of all three aspects. 

 

Gwei

Gwei is a small unit of ETH used in calculating the operation cost and the miner’s incentive. It’s the unit attached to each gas unit, making it convertible to monetary incentives. 

1 ETH is worth 1 billion gwei. Gwei is used to determine how much you’re willing to pay a miner in exchange for doing an operation. This means that the higher the fee, the more appealing it is to miners and the faster your operation will be done. 

 

Gas limit

Gas limit is the range of gas units required in accomplishing all the necessary instructions in a transaction. It’s your guess at the total amount of work you’re requesting. This is how you provide fuel for all the necessary operations needed to finish your transaction. The one who wants the transaction completed is the one who sets the gas limit. Every single transaction done in the blockchain requires a certain number of gas units to go through. 

 

Setting the gas limit

Basically, the more complex your transaction, the higher the gas limit. Finding out the specific gas limit can be hard, but there are applications or websites (e.g. ETH Gas Station and Ganache) that help determine the limit so you won’t have to do any computations for yourself.

 

Complexity ↑ = Computational work ↑ = Fees ↑ = Gas limit ↑

 

You might think that it’s better to set the Ethereum gas limit high so you won’t risk failure, but in reality, it’s not. Every block on the Ethereum blockchain consists of a certain number of transactions with a maximum gas limit.

 

Setting the limit unnecessarily high for a simple transaction only consumes space in a block that could’ve been occupied by other transactions. Typically, 21,000 gas is enough to satisfy most transactions. For more complex transactions, it can require a limit of 100,000 to 200,000 gas.

 

Gas price

If the gas limit tells how much you’re willing to pay for a transaction, then Ethereum gas price is how much you’re willing to pay per gas unit. The price of one unit of gas is expressed in ETH. When making an Ethereum transaction, you specify your gas price denominated in Gwei together with a gas limit. 

 

The average Ethereum gas price is determined by different factors on the network, including the demand for work. The higher the demand, the higher the price of gas, though you get to decide the gas price of your transaction. Remember - this is what miners consider when picking which work to do.

 

The average gas price is approximately 20 gwei or 0.00000002 ETH. The price changes when there’s a high traffic and demand in the network, and there are more transactions competing to be included in the next block. Currently, the average gas price sits at 29.94 gas.

 

Transaction cost

The gas limit you set determines the amount of gas you’ll give the miner to complete a transaction. The average gas price is determined by the number of requested transactions, the number of transactions miners can handle, and the cost to handle one transaction. To get the total transaction cost, multiply the gas price by the gas limit.
 
Ethereum as a supercomputer

 

Ethereum is regarded as a groundbreaking technology for decentralizing contracts, with gas being what makes these smart contracts possible. It incentivizes miners and creates a system that prevents the network from overloading. With the gas concept and everything that comes with it, the Ethereum network has certainly managed to maintain its status as a supercomputer.

 

Hopefully it was useful. Let me know if you have any thoughts or comments 🙂 

 

Cheers,
Karl

Bitcasino.io

Edited August 17, 2020 by Bitcasino.io

[Whited35 15285]

@Bitcasino.io Nicely explained 😍! So I love to represent Ethereum as the infinite machine. The only one demerit I do not like is its lowest transaction rate per second. Due to this reason Ethereum PoW miners are harvesting a life changing benefits. Simply for PoW algorithm, computational work is directly proportional to both gas fee and the speed of the transactions. 

[gourav789 2834]

well explained , who still didn't know how Etherium gas fees is worked 🙂 , in these days Etherium gas fee's crossed 250 gewi in market ( I see in metamask ) . but now when Etherium is stable on 430$ gas fee's Also got stable at 70-110 gewi . we can also choose gas fees as our requirements , but sometime our transcation struck 😉 .

[MuhammadSh 3067]

Really informative topic, well explained.

I thought that i know much about Eth but i have learnt many things from this topic about how Eth gas works! the developers of this cryptocurrencies are really smart and the concept of Eth would stay for along time and it would has a bright future in my opinion.. but i think that the amounts of gas fees have changed and they are getting higher these days.. if you have more information about this case, share them with us please.

[Raqeebzy 6456]

Great topic there is. I had the opportunity to learn a few more things. The average gas price however has skyrocketed more than quadrupled the initial fee mainly due to the massive usage of the ethereum blockchain network; it is becoming more costly transacting in Ethereum. Perhaps the topic needs editing, it isn't too hold to be updated.

[magd 5231]

Despite my long years in the field of cryptocurrencies, I am not yet ready to bear the cost of unstable Ethereum gas, and I have not even ventured into delving into this idea. I expect that it may remain for me a general culture no more.

[Masterrex 559]

Great Thread and very informative explanation but still sudden rising of gas fees was hurting the entire Ethereum community of users, Imagine last week the gas price was more than 500 Gwei and it cost a single transaction upto $7-$9 dollars for me that was too much, and I'm sure many are thinking to leave Eth and look for another smart-contract platform that much more competent. like TRON and Credits. respectively. 

[Teminali69 1081]

On 8/17/2020 at 2:56 PM, Bitcasino.io said:

Hopefully it was useful. Let me know if you have any thoughts or comments 🙂 

So gas is like a transaction fee in all the other coins right, so what makes the ethereum fee be called gas is it just a name ethereum team decided or it as a specific reason to why it is called gas and other coin's fee is not called gas?

[Tolualive 116]

On 9/7/2020 at 9:34 AM, Masterrex said:

Great Thread and very informative explanation but still sudden rising of gas fees was hurting the entire Ethereum community of users, Imagine last week the gas price was more than 500 Gwei and it cost a single transaction upto $7-$9 dollars for me that was too much, and I'm sure many are thinking to leave Eth and look for another smart-contract platform that much more competent. like TRON and Credits. respectively. 

Ethereum gas fee is too high to pay for nowadays,that's why investors are deviating from ethereum to tron

[Irungu 4299]

wait how is that even possible, I mean you get ether for using gas or what I mean transactions give birth to ether, I dont get it. But its a great informative article that I can enjoy all day and its going to work perfectly for me this is what I was looking for thanks though

[setifien 1016]

On 9/13/2020 at 8:29 AM, lowty it said:

It is practically impossible to make small transactions with tokens from the ethereum network for the price of the gas tariff, the tariff is equal to the value of your transaction or even higher, unfortunately the network is very congested

yes exactly and it takes a lot of time to  execute the transaction due to the high on-chain activity caused by the use of usd Tether

Edited September 27, 2020 by setifien

[Pama56 1]

4 hours ago, Kareemramzy83 said:

The worst thing that happened in the Ether currency, which I do not like at all, is the high price of jazz, which costs a lot when doing any transaction. I hope that the price will be reduced a little because the matter is crazy 

It's annoying especially if you only got small amount of tokens that you wanted to transfer, the fees sometimes is more likely pricy than your expected profits. Most of us are hoping that after the release of ETH 2.0 this transaction fees will lessen to have a much affordable process.

[Saj555 2250]

A huge number of transactions are taken place in the etheruem  network. And to maintain each transaction the eth gas is required with good and different  units. That's why it's  necessary. You have explained it so much smoothly. Anyone can now understand the value of Etheruem gas and enlarge their minds. 

[rooiie 3]

in my opinion will ethereum be succesfull they need to do something about the gas fee.

IF i want to send 20 dollar with an extra 20 dollar fee it is not usable as a payment system

[vito20 5]

Free dollars are very free, I agree the conditions are a little complicated, but they will also pay for the posts separately and also + for the airdrop. A lot of bots, people leave the competition at this stage, so take into account difficult conditions, maybe even good. A piece of pie will get more

[Demotach 45]

I am personally tired of him, these commissions, these do not need updating, well, what nonsense, how much is possible, why do they care, before it was much better, but what now? Now is the complete end.

[Teminali69 1081]

On 8/27/2020 at 2:52 PM, magd said:

Despite my long years in the field of cryptocurrencies, I am not yet ready to bear the cost of unstable Ethereum gas, and I have not even ventured into delving into this idea. I expect that it may remain for me a general culture no more.

Ethereum gas or any other coin's fees will never be stable, there are coins with lower fees to use but there will always be a time when not all of us can afford network fees or any other kind of fees due to some difficulties that causes the price to go higher.

[Ridam 7455]

The topics is indeed greatly explained and I'm glad that you explain every topic related to the gass fee. And currently I see the gas fee has increased once again  maybe because of this De-Fi and more usages of Ethereum Network on huge number of projects and applications. And because of high gas fee on every transaction small traders are getting affected badly. Let's hope for the faster launch on Eth2.0 and gas fee reduced to normal as back old days.

[Luiiis 31]

I really hope that ETH 2.0 will change the gas costs because doing any operation on the Ethereum network is very expensive.

[keton_double_k 10]

On 29.09.2020 at 22:56, Kareemramzy83 said:

The worst thing that happened in the Ether currency, which I do not like at all, is the high price of jazz, which costs a lot when doing any transaction. I hope that the price will be reduced a little because the matter is crazy 

I don't sure you're right. DeFi made they buisness, so now you can see the difference.

[Cryptic 0]

Based on what I've read I think the gas is the transaction fee since ETH uses a smart contract it makes the trading possible without the third party like exchange. Also it makes the performing of the credible transaction without any third party, but the cons there is it is high compared to other crypto fee that's why some the user complaining from it.

[keton_double_k 10]

On 11.09.2020 at 11:13, Teminali69 said:

So gas is like a transaction fee in all the other coins right, so what makes the ethereum fee be called gas is it just a name ethereum team decided or it as a specific reason to why it is called gas and other coin's fee is not called gas?

It's simple. Come in my party, you will know. I'm playing. Look. This gas is not just name, this is comissions.

[wizdemak 15]

Keeps transactions from being too expensive

[Teminali69 1081]

On 10/2/2020 at 6:45 PM, keton_double_k said:

It's simple. Come in my party, you will know. I'm playing. Look. This gas is not just name, this is comissions.

I'm a bit confused there friend, what i know is that this gas is a fee, so when you say commission i do not real understand, can you enlighten me.

[khalidforu 51]

Ethereum is the second largest decentralized cryptocurrency. Now a days gas fee is very high. Middle class people to use ethereum less because of gas fee high. Most defi projects are integrated with ethereum.