Gas fees is the cost we pay for doing a transaction on blockchain. A group of people, aka miners, validate transactions in a blockchain and add them to a shared register. To do this, miners requires lot of computational power and Gas fees is how we compensate for it. (Check out the second edition for more context on mining and blockchain.)
Buying an custom ETH address can be an example of transaction being done on Ethereum blockchain. For buying yattisoni.eth, we have to pay 0.010 ETH in gas fees.
Much like petrol, Gas fees on the networks also keeps fluctuating. As the demand for transactions grows, Gas fees also increases. If the Gas fees is too less, miners can choose to ignore that transaction and instead priortise the ones offering higher Gas Fees. So, you pay more to get transactions done faster and effectively.
Gas fee rates are also proportional to the complexity of the transaction. To execute a complex smart contract or code, one will have to pay a high Gas fees. Similar to how, a powerful car requires more fuel to run.
Every blockchain network (Ethereum, Solana, Polygon etc) have different Gas fees and can be tracked on these websites:
How to pay less Gas fees?
Ethereum Gas fees tend to be really high because Ether itself costs a lot. Gas Fees on Ethereum is denominated in 'Gwei', which is a smaller unit of Ether cryptocurrency (1 billion Gwei = 1 ETH).
One way to spend less on Gas fees is to use Ethereum layer 2 solutions. Scaling solutions like Arbitrum, Loopring are built on top of the Ethereum network and aim to increase the speed and number of transactions being processed per second.
To do this, these tools only interact with Ethereum when the transaction is being validated and so miners need less Gas fees to execute the transaction. These tools also help in reducing the congestion on Ethereum network.
That’s all from G for Gas fees. If you recall any other Web3 terms starting from the letter G, please leave a comment and I will include them in later editions.
Until next week!
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