What are gas fees and why do they cost so much? Explained!
I have since learned a lot about gas fees on ethereum. There are basically two things that will determine the price of a transaction on ethereum, they are the price of gas in GWEI and the amount of gas you will need to execute the transaction or smart contract.
You can think of this like filling up a car with gas. If lots of people are using the network gas is in high demand, so the price of gas goes up. This would be like paying more for your gallon of gas at the pump. A transaction/smart contract is like a trip you will be going on in the car. A normal payment is like a very easy short trip in your car, so you only need a gallon of gas to get where your going. A smart contract is a much longer trip and requires several gallons of gas.
The amount of gas you need to execute a transaction or smart contract does not change with network traffic and congestion, only the price of the gas itself does. An NFT requires the execution of a much more complicated smart contract than a normal transaction, so you have to buy a lot more gas to get the smart contract processed by the network as it takes up more block space.
There are ways to reduce your transaction costs by altering the amount you are willing to pay for gas. You can lower the amount you are willing to pay in GWEI and your transaction will get picked up when it becomes profitable for a miner to process it. You can look at graphs of gas prices over the last several hours/days to create an estimate of whether or not the gas price you bid is likely to get picked up in a reasonable amount of time. This can be very useful when you are doing transactions that are not time sensitive, like sending crypto to yourself, or minting an NFT. However, if you are doing a time sensitive transaction like a swap on Uniswap you must be careful, because if the price of the swap changes too much before your transaction is picked up and processed the transaction may fail. When this happens you still lose a bunch of ETH to gas fees for the failed transaction.
Don’t mess with the amount of gas unless you really know what you are doing. If you run out of gas before the smart contract or transaction can execute fully the transaction will fail and you will lose all of the gas fees you paid. This is like only putting a gallon of gas into your car when you know you need to drive 100 miles. You’ll never get there.
Ethereum Gas Price Charts & Historical Gas Fees - ethereumprice
Gas price data provided by ethgasstation.info. Charts are set to your local timezone. The charts above use the…
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