⛽What is Gas?
Breakdown on what gas is, why it's needed, and how to use it.
Think of a blockchain network as a computer that processes transactions and smart contracts. When you want to send cryptocurrency or execute a smart contract on this network, you need to request the computer's resources, like processing power and storage space. Gas fees are like the payment you make to use these resources.
Here's a simple analogy: Imagine you want to send a letter, and you have to pay for postage. Gas fees are like the postage fee for your cryptocurrency transactions or smart contracts. The more complex or time-consuming your transaction or contract execution is, the higher the gas fee you'll have to pay.
Gas fees serve two main purposes:
Incentivizing Miners/Validators: Miners or validators are the people who maintain the blockchain network. They receive gas fees as a reward for processing and verifying transactions. Higher gas fees attract more miners to process your transaction faster.
Preventing Spam and Abuse: Gas fees also act as a deterrent to prevent people from overloading the network with unnecessary transactions or smart contracts. By making users pay for the resources they consume, it ensures that the network remains efficient and secure.
Ethereum Gas Fees - Gwei
Gas on Ethereum is expressed in "Gwei", this stands for "gigawei," this it is the unit of measurement for the amount of gas used in Ethereum transactions and smart contracts. One Ether (ETH) is equivalent to 1,000,000,000 Gwei. So, 1 Gwei is one billionth of an Ether. The amount of Gwei required to perform any transaction on the Ethereum network fluctuates based on network usage, in simple terms, the more people using the network, the higher the Gwei, the higher the gas fees on all transactions and vice versa. This fee is known as the "Base Fee". You can track the current cost in Gwei on any given transaction at any time on Etherscan, Ethereum's block explorer, right here
Faster Transactions
As the reward for Validators & Miners on any given network is usually taken from gas fees, if you want your transaction to be processed faster, you can opt to pay more in Gas, so that your transaction is selected for execution before others. This can be critical when making trades in during volatility and network congestion. Any good DEX will have a multitude of "gas settings" you should familiarise yourself with, usually including some default, quick-select options. During low volatility and un-congested times on the network you can afford to pay less gas without it resulting in a failed transaction, however trying to pay less than the base fee will likely see your transaction reverted.
When to Trade
Trading in volatile or congested times can get you fisted on gas fees pretty quickly if you are not careful. It may seem like small amounts but these soon add up! You often see spikes in Gas prices during hyped launches or NFT mints, when ETH starts pumping, the Gas fees go up with it! It's best to limit your trading during these times if possible. However if you really want that super awesome, golden, robot, laser-eyed, monkey NFT and you just have to mint it at launch, prepare to pay more for your transactions $$$. Trading during un-congested, low gas periods is best in most cases. But as the market becomes more active, we will all unfortunately be subject to higher gas fees. Degen's pay when the ETH whales come to play!
Alternative Networks
Ethereum is the most popular network in Crypto, so we have used this in our examples. However there are other options available. They use a multitude of new and emerging blockchain tech to lower their transaction fees. By all means check them out! However lower gas fees can mean people are far more likely to overtrade and lead to volatility, the Degen side of BSC is known to be fast moving and volatile as it's so cheap to jeet! Below are a few examples.
Keypoints
👊🏿 Gas fees are a necessary part of crypto, these fund the networks we use and allow them to be maintained 👊🏿 Gas fees fluctuate with volatility and congestion - High network traffic = High gas fees 👊🏿 When interacting with any network keep tabs on the Gas prices - Gwei for Ethereum 👊🏿 For faster transactions you can opt to pay more in gas fees to move your transaction up the list 👊🏿 Limit trading during volatile and congested times to avoid spending more than necessary on Gas 👊🏿 Alternative networks are emerging all the time with new tech to reduce gas fees, however this can also have it's own implications
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