What are eth gas fees?

If you are wondering how to avoid Ethereum gas fees, it is important to first understand what Ethereum gas fees are and why are ETH gas fees so high. Also, we will discuss how to get  free gas fee for ETH and if it is really possible.

In essence, the Ethereum gas fee refers to the cost incurred when executing a transaction on the Ethereum blockchain network. The network requires a specific amount of computational power, which is provided by miners using Ethereum mining software. These miners generate Ethereum tokens (ETH) to maintain the network's security and, in return, receive compensation for their contributions in the form of gas fees. The gas fee is denominated in Gwei, where one Gwei is equivalent to 0.000000001 ETH.

A collection of crypto transactions is called a block and the size of a block is different for different blockchains. For instance, theoretically, Bitcoin’s block size is 4M, but its average size is 1MB.

Contrary to Bitcoin, Ethereum’s block size changes due to the gas spent on a block rather than a data limit. At the moment, the gas limit per block is 30 million gas, but the target size is 15 million gas per block.

When you make a transaction on the Ethereum blockchain, it competes with other transactions to get in the next block and get sent to the network to get validated. So, if the network is congested, you may need to pay something extra to push the transaction ahead of others. This increases the crypto gas fees.

The Ethereum network experiences increased congestion as the competition to validate transactions grows. This congestion further compounds as the number of transactions on the network increases due to Ethereum's widespread success in various processes such as decentralized exchanges (DEX), blockchain games, DeFi, ERC-20 token transfers, and social and marketplaces. Additionally, as dApps introduce more features, their functionalities become more intricate, causing smart contracts to perform more operations, which results in a more congested network since complex transactions require more space.

To avoid Ethereum gas fees, there are several methods, and we've outlined eight of them for you to use.

Paying gas fees is tricky because you won’t know how much gas fees you are going to pay until making the transaction and paying for gas. But, to save your gas fees on your transactions, you could use the DeFi Saver app.

Higher gas fees on the Ethereum blockchain are primarily caused by network congestion. However, the level of congestion varies throughout the day, and you may notice that the same transaction costs less during certain times.

Tracking these lower congestion times manually can be challenging and may impede your productivity. To make this task easier, you can visit the Ethereum Gas Charts webpage, which provides detailed graphs of gas prices throughout the week. In addition to this, you can reduce your gas fees by avoiding working hours on weekdays.

If you need to perform a transaction during the weekdays, consider carrying them out after midnight when the network is less congested. Alternatively, waiting until the weekend when gas prices tend to be lower can also help you reduce your gas fees.

One of the easiest ways to avoid Ethereum gas fees is to use Ethereum projects and dApps that offer fee subsidies or nominal fees. If you are looking for such a platform, Balancer is a great one. The platform refunds the gas fees up to 90 percent in the form of BAL tokens. Balancer minimizes the gas fees for high-frequency traders by carrying out traders that don’t leave the vault.

Other DeFi apps such as Yearn’s V2 Vault and KeeperDAO combine individual user transactions. Then, the user pays the gas fees together instead of paying them individually. This saves a lot of gas fees.

If you remove your storage variables on the blockchain, you can earn ETH and create gas tokens. This process forms the basis of gas tokenization. When the gas fees are low, you can mint a significant number of gas tokens. During the execution of your transaction on the blockchain, you can redeem your gas tokens for Ether, which can later be used to pay a gas fee. GasToken.io is one of the fastest and easiest ways to mint gas tokens.

An Ethereum wallet does not consider real-time congestion of transactions and therefore, it cannot estimate accurate gas fees. You can use specialized tools such as Gas Now or Etherscan’s Gas Tracker if your transactions are time-sensitive.

These specialized tools evaluate pending transactions on the network and then calculate the gas fees. Ultimately, these tools help you save a lot of gas fees and even help you avoid penalties in case you forgot to set the correct gas limits.

The Ethereum Mainnet, also known as Layer One, is frequently congested, making transactions costly. Layer-two blockchains offer users the ability to scale up their transactions, and they do so by utilizing technologies such as Rollups and side chains.

This results in lower gas fees and faster transaction completion times. If you are looking for a solution to reduce transaction costs, you may want to consider using layer-two solutions such as Arbitum, Optimism, and Polygon.

Ethereum might tackle the expensive gas fees situation permanently with its Ethereum 2.0 upgrade. In fact, one of the reasons Ethereum is upgrading is to reduce gas fees, as a part of reducing network congestion and speeding up the blockchain.

There are two ways the gas fees will reduce with the ETH 2.0 upgrade. The first is sharding and the second is the switch from the PoW consensus mechanism to the PoS consensus mechanism. With the switching of the consensus mechanism, you don’t have to solve intricate maths puzzles to maintain network integrity. This also leads to fewer transaction fees all while making it easier for extra nodes to join the network and validate transactions. This is a win-win for Ethereum as it reduces gas fees and helps scale the blockchain network.

Now, let’s see if we can really get a free gas fee for ETH.

Gas fees are an essential part of the Ethereum network, and they are necessary to incentivize miners to process transactions and secure the network. As a result, there is no way to completely avoid gas fees for Ethereum transactions. However, you may be able to reduce the gas fees you pay by using gas tokens like CHI or participating in airdrops that distribute tokens that can be used to pay gas fees. Additionally, using layer-two scaling solutions like Optimism or Arbitrum can reduce the gas fees you pay on the Ethereum network.

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Ethereum gas fees are an important concept to understand when using Ethereum.

There will be “gas” involved if you wish to use the Ethereum blockchain. These fees are paid to miners in exchange for executing smart contracts and transactions on the Ethereum blockchain.

The amount of gas required for a transaction can vary depending on the complexity of the transaction, and miners will charge a fee for their services. For example, performing a simple transaction might use less gas than a more complex transaction, like a token swap or a smart contract.

Gas fees are paid in ETH and the amount charged by miners can vary depending on network demand.

Gas fees are what each user pays to carry out a transaction or other activity on the Ethereum blockchain. Transaction costs are charged by the majority of blockchain networks to their users, and these fees can be greater or lower than those of Ethereum.

Understanding Ethereum gas fees is essential to using the Ethereum blockchain, and it’s important to make sure you’re aware of their implications before executing a transaction.

But how does this gas work and for what purpose? Let’s find out in more detail!

For a user to interact with the network, the network needs a certain number of Ether (ETH), the native currency of Ethereum. This amount is known as “gas.”

These fees are designed to pay Ethereum miners for the energy expended in transaction verification and to add a layer of protection to the Ethereum network by making it too expensive for spammers to spread their harmful code throughout the network.

Gas fees are everyone’s least favorite aspect of Ethereum, even though they are an efficient way to motivate miners to continue confirming transactions and upholding network security.

This is because gas costs can be outrageously expensive when the network is crowded. Usually, miners receive payment in the native cryptocurrency of the blockchain.

While paying for gas is a must for blockchain transactions (you cannot perform any transaction without it), the price of gas itself is extremely unpredictable and depends on a wide range of factors. Only Ether (ETH), or ERC-20 tokens, which are Ethereum’s native currency, can be used to pay fees.

The price of ETH gas is expressed in a unit known as “gwei.” A gwei is equivalent to 0.000000001 ETH.

We should first comprehend the idea of gwei to grasp how Ethereum gas is calculated.

The cost of gas is measured in gwei, a very tiny unit of Ether (1 gwei = 0.000000001 ETH). A gas fee of 30 gwei, for instance, would be equal to only 0.000000030 ETH.

Ethereum gas costs are determined by the following formula:

Total Gas Fee = Gas units (limit) x (Base fee + Tip)

This term describes the maximum quantity of gas you will spend on a single transaction. You can change the amount of gas your transaction will cost, but you should do it wisely. This is because various transactions with the Ethereum blockchain will require varying amounts of gas to be successful.

Nevertheless, Ethereum will only consume the precise quantity of gas required to complete the transaction in question. Your wallet will be credited with any shortfall between your gas cap and the actual quantity of gwei required.

While this is processing, if you set your gas limit too low, your transaction will probably fail and you’ll lose out on wasted gas money that you’ll never be able to get back.

The amount of gas units has to be multiplied by the gas price to get the total gas fees. The gas price consists of the base fee and the tip.

The base fee is the minimal gas price needed to record a transaction on the Ethereum blockchain. No matter what kind of transaction it is, the amount of gas needed for a base charge is decided by the desire for it to be included.

To lower the supply of ETH in circulation, these basic fees are subsequently burned. When a currency or token is burned, it is permanently removed from the total supply.

Base fees are continuously modified depending on the number of users connecting with the network at any given moment since they are a demand-driven component.

Also referred to as a priority fee, tips are an extra cost added to your transaction to speed up completion. Because it offers an incentive for Ethereum miners to verify your transaction ahead of others, this charge is more commonly referred to as a tip.

A priority charge is connected to each transaction that a miner confirms, and they are rewarded with that fee as compensation. Miners prefer executing a transaction with the biggest tips attached to maximize their profits since they can see which transactions involve tips.

Transactions on the blockchain do not occur automatically. The execution of every transaction requires a substantial amount of computing resources.

The gas fees are essentially the compensation paid to miners for confirming transactions and putting them into the blockchain, a procedure that takes time and effort. Therefore, the gas fees serve as an incentive to encourage individuals to start mining and contribute to preserving the reliability of the decentralized ledger.

They help to protect the Ethereum network as well. Every transaction must include a charge to avoid inadvertent infinite loops and malicious people from threatening the security of the network.

To properly complete any cryptocurrency transaction, the transaction must be confirmed before it is uploaded to the blockchain. The critical role of transaction verification is carried out by people that stake Ether on the Ethereum network, and they are compensated with gas costs for each transaction they confirm.

In general, there will be a larger cost for complex transactions like using smart contracts or paying for decentralized apps (also known as dApps).

Transaction processing can take some time, however, and users can pay a priority charge, often known as a tip, in addition to the gas price to encourage miners to validate their transactions more quickly.

While gas fees raise the cost of a transaction on the Ethereum network, they do have a critical function: they increase user security on the Ethereum blockchain. Because each transaction has to be paid for, Ethereum is less appealing to hackers who could try to flood the system with requests.

In addition to enhancing cybersecurity, charging potential hackers helps the network operate more effectively by preventing spammers from clogging up bandwidth.

Ethereum gas fees are often primarily influenced by the supply and demand among the network’s validators. This implies that if the gas price doesn’t satisfy their requirements, they can refuse a transaction.

Additionally, it implies that the availability and demand for processing capacity affect how much gas costs.

The “Ethereum gas price” enters the picture here. How much you’re ready to spend on a transaction is determined by your gas price and gas limit. You can inform the Ethereum verifiers that a transaction requires more effort by increasing the tip, which increases the gas price.

However, if you make the gas limit too low, validators might reject your transaction. This explains why gas prices are so high at a certain time and day.

The most costly and crowded times are during the daily hours of 8 am to 1 pm (EST). This is hardly surprising given that everyone is awake and working in Europe and the US at that time.

The weekday period between midnight and 4 am in the morning (EST), when the majority of America is asleep, Europe is just beginning its day, and Asia is wrapping up its workday, is when the price of ETH gas is cheapest.

When ETH gas costs are at their lowest, which is on a Saturday or Sunday between 2 am and 3 am (EST), it is the optimal time to participate in an exchange transaction.

On the other hand, Tuesdays and Thursdays are the most expensive days since this is the time when the network is most congested and gas prices are the highest.

Gas fees benefit people who maintain and secure the Ethereum network.

Gas fee distributions accrue to Proof-of-Work (PoW) miners on the Ethereum protocol on the execution layer of Ethereum (previously known as Ethereum 1.0).

Gas fees are, thus, allocated to individuals staking ETH to support this revised Proof-of-Stake (PoS) variant of Ethereum on the consensus layer of Ethereum (previously known as Ethereum 2.0).

The Ethereum blockchain network is among the most prominent blockchains for hosting decentralized apps, or dApps, and smart contracts. The Ethereum blockchain is known for being pricey and unresponsive to use, though.

Compared to the Bitcoin blockchain network, for instance, the average transaction cost on the Ethereum network is often higher.

Users of the Ethereum blockchain who wish to finish a transaction quicker can simply give a higher tip. Conversely, users who wish to reduce their gas costs should pick periods when network activity is comparatively lighter.

Those who don’t mind a sluggish transaction speed can also leave a smaller tip.

ETH gas can be used for transmitting ETH or ERC-20 tokens via the Ethereum network or, based on the transaction’s goals, for enabling smart contracts.

Due to the London Upgrade, customers can now contribute more substantial tips to help optimize their transactions. Gas prices fluctuate depending on the amount of network traffic present at any one moment.

What is gas? Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network. Since each Ethereum transaction requires computational resources to execute, each transaction requires a fee.

Mrig P also contributed to this article

Ethereum is the world’s first, largest, and most widely used decentralized application (dApp) blockchain. It hosts thousands of dApps that attract millions of users who conduct billions of dollars worth of daily transactions.

While these transactions differ in size, form, and nature, they all have one thing in common: gas fees.

This article explains what Ethereum gas fees are, why they’re sometimes expensive, how you can pay lower fees, and the Ethereum upgrades that aim to lower them.

Gas fees are the fees users pay on Ethereum to conduct transactions such as swapping or executing smart contracts. Users can only pay this fee in ether (ETH). The network nodes earn a fraction of this fee for spending computing power to validate and confirm the transactions, and the remainder of the fee is burned.

The formula to calculate gas fees has changed since the London upgrade, which was implemented in August 2021.

To best understand how gas fees are calculated, we’ll need to first clearly define a few terms.

1. Gas: Gas is the unit that measures computational power required to conduct a transaction, which varies depending on the complexity of the transaction. The computation and gas units needed for a token swap, for example, will be much lower than for minting an NFT or publishing a smart contract.

2. Gas price: The gas price is the price per unit of gas, and it is measured in gwei, a smaller unit of ETH that equals 0.000000001 ETH (10-9 ETH). (Conversely, 1 ETH equals 1 billion gwei).

Gas fees: Gas fees are the final fees paid by users to complete a transaction.

Now, let’s see where these terms fit into the gas fee calculation formula.

Before the London upgrade, users had to make an assumption about their gas price based on network congestion, or how busy the network is at any given time. In doing so, every user tried to outbid as many other users as possible to try and get their transactions validated first.

The formula to calculate the gas fees before the London upgrade was:

Gas fee = Gas units (limit) * Gas price per unit

By default, the minimum gas unit you must spend on any Ethereum transaction is 21,000.

So, let’s suppose Alice is sending 5 ETH to Bob. The gas unit is 21,000 by default and Alice chooses to pay 300 gwei per unit based on the current network conditions.

Going by the above formula, Alice would pay a gas fee of 21,000 * 100 gwei. Or 2,100,000 gwei, which equals 0.002093 ETH.

5.002093 ETH will therefore be withdrawn from Alice’s wallet. Bob will receive 5 ETH and the rest goes toward making the transaction successful.

The London upgrade implemented EIP-1559, which proposed a new mechanism to calculate gas fees with a fixed per-block base fee and flexible block size to tackle network congestion.

The goal of this upgrade was to remove the unpredictability of gas fees based on network congestion. The lack of surety forced users to try and outbid the gas prices of other users, consequently taking the gas prices even higher.

With a pre-defined base gas price for every block, the guesswork is no more in the equation and the new formula is:

Gas fee = Gas units (limit) * (base fee + priority fee)

Now, let’s suppose Bob wants to send 5 ETH to Alice. The gas limit is 21,000, the block fee at that instance is 30 gwei, and Bob adds a priority fee of 10 gwei for his transaction to be validated faster.

So, Bob would pay a gas fee equal to 21,000 * (30+10) = 840,000 gwei or 0.000839 ETH.

Here, the network burns the base fee, i.e. 21,000*30 gwei while the priority fee — 21,000*10 gwei — goes to the validator that adds the transaction to the chain.

While most cryptocurrency wallets automatically detect the demand and set the priority fee and gas limit by themselves, you can use advanced settings to alter the numbers when finalizing a transaction.

In the below MetaMask screenshot, you can see the base price is 16 gwei and the wallet recommends a priority fee of 0.5 to 7 gwei. Further, the wallet also shows the transaction times for respective fees that you may be willing to pay.

It’s important to note though that the London upgrade was not aimed at directly lowering the average gas cost on Ethereum. Instead, the aim was to limit the waste of gas due to uncertainty.

It is not rare for people to pay 100s of dollars to execute simple swapping or buying transactions on Ethereum. That is especially the case when the demand is high, such as during the 2021 bull market.

But why?

While every blockchain has three core attributes - security, scalability, and decentralization - it is only practical to maximize on two of these while compromising with the third one.

Ethereum co-founder Vitalik Buterin called this the blockchain trilemma.

Considering Ethereum’s USPs are decentralization and security, the network compromises with scalability. As a result Ethereum can only process about 14 transactions per second.

For a blockchain where users transact billions worth of value every day, that’s an alarmingly slow transaction speed.

Now, when the network is busier than usual, there could be hundreds of transactions sent every second to the mempool — a waiting area for transactions. However, as we know, Ethereum validators can only validate about 14 per second.

Naturally, validators prefer to select transactions with higher gas prices. Due to this, users keep trying to outbid other transaction requests to get their transaction included in a block first.

You can think of this as a blind auction, where users will make bids (in the form of gwei) to incentivize miners to pick up their transactions. Just like a traditional auction, the highest bids will be chosen.

As a result, gas prices keep rising until the transaction volume drops.

Since the London upgrade, however (as you saw in the gas price calculation section), the blind auction analogy is no longer valid. Now, the network defines a fixed base fee for every new block depending on the demand for transactions in the previous block.

While the base fee is enough for a transaction to go through, the users can still add a tip (priority fee) for validators to make their transactions go faster.

Note: During a popular NFT mint or other high network congestion activities, gas prices can still be exorbitant.

Since its launch, Ethereum relied on a proof-of-work consensus algorithm to validate transactions and add them to the network.

In September 2022, however, the Ethereum mainnet merged with the Beacon chain, marking the event popularly called The Merge. With this, Ethereum transitioned from the PoW consensus to proof-of-stake.

Contrary to popular belief, The Merge itself didn’t aim to lower gas prices. And that is why it has so far had little impact on the gas fee Ethereum users pay.

However, Ethereum’s switch to PoS was crucial for deploying sharding — a mechanism in which multiple side chains are deployed to offload transactions from the mainnet. Ethereum will have 64 shard chains that will help significantly increase its scalability and transaction speed. According to Ethereum co-founder Vitalik Buterin, Ethereum will be able to process 100,000 transactions per second.

Higher scalability would mean extremely lower network congestion. In theory, this means transactions will go through without any problem even during times of high volume.

Setting the gas price or gas limit lower than a certain required amount may result in failed transactions. If that happens, your gas fee amount would still get deducted from your wallet but the transaction wouldn’t go through.

Always first check the minimum gas price at any given time across various Ethereum calculators to ensure your transactions don’t fail.

Ethereum’s London upgrade has removed uncertainty from gas price calculations.

Now, whenever you conduct a transaction, there is always a base fee attached to it that the network decides and you cannot change. However, you can add a priority fee as a tip to validators and expect them to pick your transaction sooner.

The gas unit (and thus the gas fee) needed for different kinds of transactions is different. For instance, you will need to pay considerably more for complex transactions such as executing a smart contract.

Even with fixed base fees, there’s no certainty that the gas fees will be low. It all depends on network congestion.

To avoid paying high gas prices, you can do one of these three things:

Schedule your transactions for times with less network congestion. Try not to transact during an NFT mint as the network may get congested.

Most wallets will allow you to preview the estimated gas price that you’ll pay. You can alter these numbers in the advanced gas settings within the wallet.

Several tools can show you what current gas prices look like. Some of these include

The Merge was the biggest challenge for Ethereum to increase scalability and bring down the costs of using the network. Once it’s fully complete, Ethereum users will experience a combination of instant transactions and low gas fees.

When does this happen exactly?

There’s no official date, but according to the Ethereum Foundation’s best-case scenario, sharding should be live in 2023. That’s when we can expect to be finally freed from the gas trap on Ethereum.