Let us know the details
There is a lot of talk about GAS, but what it is?
What is GAS in blockchain technology?
Gas is a unit of measurement for how much computational power the Ethereum network needs to process your transaction. Eth GAS cost has become the most important methods of transaction. It’s similar to the amount of work you must complete before you get to pay for your work in Bitcoin or other cryptocurrencies. The more complex your transaction, the more computational power it’ll take to process it. And the higher the Ethereum gas cost will be.
Gas is what makes Ethereum different from other cryptocurrencies. In traditional blockchains, miners compete to solve a mathematical puzzle to add new blocks to the chain. The first miner to solve the problem will get a block reward (think gold) . And all subsequent miners get their share based on how quickly they finish solving the puzzle. The Ethereum Gas costs have become the latest talk of all the miners.
In Ethereum’s case, however, miners are competing to create new blocks on the blockchain. This is through “proof-of-work” algorithms that require computational power to complete. These algorithms generate computational resources that use gas for transactions on the network or even for creating new smart contracts!
The gas used in each transaction is determines the amount of computational power which requires to execute the transaction. For using Ether, there is a pay of GAS which is the currency to pay for computation time.
Even If the Ethereum Gas cost is the most important and effective means of having transactions for people, it is not what most people like. The Ethereum Gas cost can highly inflate when the network is too much blown up. But Gas is required to make it too expensive for the spammers to spam the network. So, The reason for this is to verify the security and transaction, you will need a certain amount of fees.
So let’s watch out for the details of high ethereum Gas costs.
FIRST, let’s see how to calculate GAS fees –
The Gas fees are calculated in units of “GWEI” as well as “Wei”.
WEI is the smallest denomination of Ether. One ETH has Quadrillion WEI and a billion GWEI.
Gas costs are calculated by adding GWEI to the price of ETH. This is calculated using the current exchange rate between ETH and USD. Additionally, you can calculate the gas price at the start of each block by using GWEI to calculate it.
There is one basic formula to calculate the Gas required :
Gas units(limit)* Base fee+tip
In the above equation, let us look at each of them.
- Gas unit (limit)- This refers to the maximum amount of gas you want to spend for a particular transaction. These adjustments are done carefully as different Ether interactions will need a different amount of gas spent. If the gas limit is equal to or higher, then the transaction will be successful. And if vice versa then the transaction fails. While making new blocks, the total sum of transaction gas limits should be less than the gas limit of the block. The maximum size of the block is 30 million gas.
2 ) BASE FEE – The base fee is the minimum amount of Gas required for transactions for a decentralized blockchain technology that is Ethereum. The base fee majorly depends upon the amount of transaction work it has to do no matter what type it is. Hence, you can determine the base fee by the Ethereum network and not by the end users. It is dynamic in function as adjusts according to the transaction demands. When you mine a block, the base fee burns and thus, removes from the cycle. The base fee increases by 12.5% per block each time the size of the previous block exceeds 15 million gas.
3) TIP – The tip is also known as the priority fee. These are the additional fees that a user pays to the miners. The major advantage of paying the tip is that it prioritizes the transactions of a user faster. The higher the amount of the tip, the faster their transaction takes to complete.
It’s important to note that if you set your gas unit limit below the amount of gas to complete your interaction, your transaction reverts but you wouldn’t receive your gas fee back. That is because the miner has already done the equivalent amount of work to process your transaction. Thus,they receive the fees for doing so even if the transaction doesn’t go through.
Why does the GAS cost high?
The gas fees calculation is mainly upon the London upgrade model. Now, in this model, the gas fee transaction depends upon the priority fee and the base fee with the gas limit. Due to this, the users have faced major all-time high-priced ETH Gas fees.
The Gas fees have soared high due to the high cost of ETH. The users are not able to find any solution for the high gas fees . Furthermore, the problem lies in the smart contracts platforms where most of the apps are made.
What lies the possible solution for the above problem?
Not all users have the ability to drive a completely smooth transaction with the help of Gas. But just because of the high price, Ethereum removal isn’t possible. You need to grasp the mechanism of its working and you will be a master of all.
Nowadays, the high fees of Ethereum gas prove that users are most attracted to ETH than any other platform. But users have now started to shift to their counterparts just to make their burden of fees less.
Ethers can switch to Solana, Binance smart chain platform, etc. to pay for the fees in pennies. But most users trust ETH-based platforms as it has the biggest advantage of being decentralized in nature. Thus, promising them the highest level of security.
Rather than switching to other platforms for spending less, you can watch out for the following steps to pay less on GAS fees :
- Pick up the right time: You cannot directly impact your overall gas fees to less. But you can decide the time. The base fee would be less when a few people are transacting during a particular time of the day. There is need for more work if people are trying to interact with the network. Weekends are the best time to usually perform the transaction when fewer people are transacting.
- Reduce your tip: If you don’t want to focus on the base fee. Then you can surely reduce your priority fee or tip. This can be possible if your transaction is not time-sensitive and you are willing to remain patient.
- Set a max fee limit: This means that by setting the max fee limit to a certain limit, the X gwei Is the total amount you are willing to spend maximum. After the transaction completes, a refund of the remaining amount will come which is does not spend on the total gas fee. The setting up of a max fee will provide you with peace of mind. Thus, not spending more than required for a particular transaction.
- Layer 2 scaling solutions: There are many scaling tools available that make your transactions per second more speedily .And in numbers too. They are extensions of Eth. They handle transactions differently than Ethereum does. These transactions are usually off-chain but there are records on-chain by the Ethereum network. This method involves the use of Ethereum only when a transaction completes. And therefore there is a lesser need for the gas by the miners. Layer 2 solutions also ease Ethereum network traffic and hence don’t overload the users with high base fees.
How does Eth GAS powers up the industries?
Despite the limitations of the high gas fee in the Ethereum blockchain network, there is still a wider user base for transactions on the Ethereum platform. Let’s continue to see how it has powered up the industry…
- Due to high congestion in the Ethereum blockchain, users started experiencing discomfort. Hence, a newly rebranded Polygon, formerly known as Matic was launched. Polygon offers a highly user-friendly experience faster and virtually free of fees.
- Polygon is the layer 2 scaling implementation. It makes the Ethereum blockchain network a full-fledged multi-chain system.
- Another project launched named Synthetix., makes the Ethereum blockchain handle with lower fees.
- By 2022, the industries are expecting the roll-out of Ethereum 2.0 which will transact many more in a few seconds.
- Mainly ‘sharding’ of the blockchain ecosystem is seen. This means that the network shares into smaller, semi-independent blockchains. Thereby, easing the transaction process. There won’t be any need for every node during the transaction process to verify and store all the data.
- Despite the huge gas fees in Ethereum industries believe that no other counterparts have replaced the Ethereum blockchain.
CONCLUSION: Is Ethereum the multi-chain future?
Due to Ethereum’s interconnectedness and brand awareness, users are completely loyal to the Ethereum network. There lies a little doubt about how Ethereum will be able to resist its counterparts. But, the upcoming layer 2 scaling solutions will help the process of being user-friendly more easily.
In both ways, the rising gas prices of the Ethereum blockchain will force the apps to shift from the Ethereum blockchains. But whether that migration will be towards the layer 2 technologies or the alternate technologies is yet another question that is not answerable at the moment.