What Are Ethereum Gas Fees? Here’s The Complete Guide
Whenever you make a transaction on the blockchain, it usually incurs a miner fee, also known as gas fee. This miner fee applies for all blockchains such as Ethereum, Polygon, Binance Smart Chain and others. Miner fees on the Ethereum blockchain are the most expensive. In fact, during times of congestion, the cost of gas fees may skyrocket and can incur high costs if you do not manage your gas fees correctly. This guide will help you avoid paying such high fees. For the purposes of this guide, we will focus on gas fees for the Ethereum blockchain.
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What Are Gas Fees?
Whenever a transaction happens on the blockchain, “miners” use their computers and computing power to verify the transaction on the blockchain ledger. In exchange for verifying these transactions, they get a miner reward fee paid for by the ones initiating the transaction. This miner reward fee is also known as gas fees.
When Do I Have To Pay Gas Fees?
You pretty much have to pay gas fees for every single transaction you make that is on the Ethereum blockchain. For example, sending cryptocurrency from one wallet to another, buying NFTs, transferring NFTs, or listing your NFT on NFT marketplaces like OpenSea.io.
How Much Is The Gas Fee?
The price of gas you must pay in order for your transaction to succeed depends varies— Meaning, you need to check what is the current gas price and price your gas fee accordingly whenever you make a transaction. One of the best places to check the gas price is etherscan.io.
How To Use Etherscan?
Etherscan.io is a website which allows you to check the current gas price so you can pay an appropriate amount of gas fees for your transaction. To check the current gas price, visit this url: https://etherscan.io/gastracker. You will see a section which looks like the screenshot below.
First of all, you will notice that the price of gas is in gwei and not ethereum. Gwei is a denominator of ethereum where 1 ETH = 1 billion gwei.
That’s really cheap! You might be thinking. Well, unfortunately, the total gas fee calculation is as follows:
Total Gas Fee = Gas unit (limits) * (Base fee + Tip)
Here are the definitions for each:
Gas units (limits): This refers to the maximum amount of gas you are willing to spend on a transaction.
Base fee: This refers to the minimum amount of gas required to include a transaction on the Ethereum blockchain. The more congested (# of transactions going on) the network, the higher the base fee.
Tips: Also known as a priority fee, tips are an additional fee made to have your transaction completed faster. This fee incentivizes miners to verify your transaction over others.
To keep things simple, in metamask, you should price your gas fee in MetaMask based on how fast you want to transaction to happen based on the recommended gwei in Low, Average or High.
- Low = slower but cheaper
- Average = normal
- High = faster but more expensive
What Happens If I Price My Gas Fee Too Low?
If you price your gas fee too low, your transaction may get “stuck”. Meaning, it might fail after a long time or your transaction might get front-run by another transaction which pays a higher gas fee(for example, when trying to buy an NFT which has limited supply). When that happens, your transaction is cancelled and you will lose your gas money. Hence, it is extremely important that you not price your gas fee too low.
How Much Do Gas Fees Cost On Other Blockchains?
The average gas fee price on other blockchains are very low. For example, on Polygon it can cost anywhere from $1 to $5 per transaction. For Binance Smart Chain, it is usually around $5 per transaction. The layer 2 Ethereum solutions aim to solve the issues associated with ETH gas fees.
Tips For Managing Gas Fees
You can customize the amount of gas you want to pay for your transaction in MetaMask. Simply click the “Edit” button (right above the estimated gas fee) and then click “Advanced Options”.
From there, you can either choose Low, Average, or High based on your needs.
If you are trying to buy a very popular NFT and are worried that it gets sold out fast, then pricing a high gas fee is recommended so that you will not get “front-run” by others.
If you are not in a hurry to make the transaction you can go with Average or Low. If the average gas fee price is high due to congestion it is recommended to wait until the price goes down before making your transaction.
Finally, you an also use a free Chrome Extension like check checkgasprice.com which displays the live Etherscan price on OpenSea as you’re browsing NFTs.
We hope you found these tips useful!