What are gas fees?
Gas is an important mechanism for interacting with Web3.
So, what is it exactly?
Obviously, it’s not physical gasoline used to power an automobile. Web3 “gas” is the fee that each user is required to pay so that the transaction or smart contract can be successfully carried out. Gas fees on Ethereum are paid in ether, and its prices are denominated in gwei (giga wei). 1 gwei=1,000,000,000 wei. Each gwei is equal to 0.0000000001 ETH. So instead of saying gas price is 0.0000000001 ether, we can say – gas is 1gwei.
Other EVM networks also require gas, and, like the Oasis Network for example, are paid using fractions of their native token.
Gas prices are determined by the supply and demand between validators and users of a network. Fees collected by validators must be attractive, they can even ignore transactions, but at the same time, paying a high price for gas would lead to a loss of profit for a trader. If the gas price is set too low, the transaction may be missed, ignored, or the wallet may get stuck, freezing transactions in that wallet. A wallet will remain locked until the transaction is resolved.
Gas cap or limit refers to the maximum amount of gas a user is willing to consume in a transaction. More complicated transactions involving smart contracts need more computational work, so they need a higher gas limit than a simple payment. High gas fees are due to the popularity of a network. Running any operation on an EVM chain requires gas consumption, and gas space is limited per block.
As the functionality of dApps becomes more complex, so does the number of operations that a smart contract performs, meaning that each transaction takes up more space in a block of limited size.
Having this basic understanding of the mechanics of gas and budgeting funds for spending gas while being active onchain is an important part of using crypto today.