Table of Contents
What is a Gas fee?
The concept of Gas was introduced to maintain a distinct value layer that solely indicates the computational expenses on the Ethereum network. Thus, Gas is a term used to refer to the computational work required to validate a transaction on the Ethereum network.
The height of the Gas fee will depend on the cost congestion of the Ethereum network and the costs a miner incurs to perform a transaction. The more complex the transaction, the higher the Gas fee. This Gas fee is based on the ‘Gas price’, which is referred to in terms of Ether – ETH.
Because the Gas fees for transactions are many times smaller than one full Ether, they will be referred to in Gwei.
The table below shows the different units of Ether. Notably, each denomination has been given a special nickname, inspired by prominent figures from the Ethereum ecosystem.
What is a Gwei?
Gwei is a denomination of Ether – ETH and will be used in expressing the cost of Gas. It is known that 1 Gwei is equivalent to 0.000000001 Ether (ETH).
How to determine the Gas fee?
Traders can set their own Gas price and thus influence their transaction speed.
Of course, you don’t want to set a Gas price too low because you might run the risk that the transaction will never be completed and you will have to execute it again. To see what the ideal Gas price is, be sure to check EtherScan.
Why are the gas fees exponentially high on Ethereum?
Gas is used in every Ethereum smart contract action. Also, miners don’t work for free and are incentivized to prioritize transactions with the highest gas prices. To conclude; the more popular the Ethereum network becomes, the more gas fees will skyrocket.