What is gas?

“Gas” is Ethereum’s unit measurement for the computational work needed to perform specific operations on the blockchain. The number of units of gas required to execute a given operation is the “gas cost”. Each operation performed by a transaction or smart contract costs a certain amount of gas units. The maximum amount of gas units that you are willing to pay for a transaction is known as the “gas limit”. A simple transfer of ether (ETH), the native cryptocurrency of Ethereum, to another address requires a gas limit of 21,000 units. An ERC20 token transfer will have a higher gas cost. Transactions involving smart contracts often require a higher gas limit, sometimes hundreds of thousands of gas units, since they consist of multiple operations that require more computational work than a simple transfer. “Gas price” is the amount of ETH you are willing to pay per unit of gas for a transaction on the Ethereum network. Gas prices are denoted in a denomination of ETH called gwei, which is equal to 0.000000001 ETH. The total transaction fee is calculated by taking the total gas units used by the transaction multiplied by the gas price. Most digital wallets will calculate an approximate gas fee you should set depending on how fast you want the transaction to be confirmed. You may end up paying a lower gas cost than the estimated fee if the price of gas goes down during your transaction. If the price of gas goes up you may need to speed up your transaction. You can read more about what to do if your transaction is stuck here. Note: Link to ‘My transaction is stuck’ article) The gas price needed to get included in the next block depends on how much demand there is for block space on the Ethereum network at the time. This is because miners typically include transactions sorted by the highest gas price when deciding which transactions to include in the next block. The changing demand can lead to fluctuations in the transaction fees throughout the day. For example: The same transaction involving a smart contract, such as a token swap on a decentralized exchange, that uses 200,000 gas units would cost 0.01 ETH when gwei is at 50 and would cost 0.06 ETH when gwei is at 300.

During peak times some transaction fees can be hundreds of dollars worth of ETH. You can monitor gas prices to make transactions when gas prices are at a level you are comfortable with.

For gas tracking resources click here.