Ethereum Gas Price
To calculate commissions on the Ethereum blockchain, you must use gas. The cost of this unit is set dynamically depending on the load on the network. It is important to understand the pricing process to reduce transaction costs.
Fees are a way to incentivize miners to keep the decentralized Ethereum network running. Without miners, the power of the blockchain will quickly drop, the transactions in it will take too long, and the emission will be reduced to a minimum. The Ethereum gas price is formed dynamically depending on how busy the network is at the moment and how many miners provide their power to validate transactions.
How is the price of gas determined?
The payment of commission is made in ethers. But for the convenience of calculations, smaller units are used, namely Gwei or one billionth of the ETH token. Blockchain users can always find out the current cost of gas using services that are launched on the Internet.
For example, ETH Gas Station. The site indicates how many coins need to be spent processing a transaction and how long it will take for the transaction to be included in the formed block, which is then attached to the chain.
The cost of gas changes all the time depending on two factors:
- the number of transactions that are currently processed in the blockchain;
- the number of miners connected to the network and processing transactions.
For example, if a user sees the number 50 on the tracker, this means that in order to complete the transaction (it is confirmed by the miner), you need to pay 50 gwei. But to determine the final price, you must also multiply the number of currency units by the gas limit for a particular operation. After that, you can get the size of the commission for the transfer on the air. For example, to transfer coins from one blockchain participant to another, 21 thousand units of gas are needed.
Many cryptocurrency wallets, such as Metamask, can calculate the commission and show it in the transaction window in dollars.
Savings on transactions
Before the London update, fees on the Ethereum blockchain were high. And over time, it increased to exorbitant amounts. For example, in the summer of 2020, the average commission was $6. However, a year later, more than $300 could be spent on the cryptocurrency exchange. It came to an absurd situation when the commission could be more than the amount of the operation.
Later, the commissions decreased, but still remain relatively high. However, they can be reduced if you use some life hacks:
- The cost of gas constantly fluctuates throughout the day, as blockchain participants in different time zones get to work. Therefore, you can track this indicator and choose the least busy time.
- On weekends, business activity drops, which reduces the cost of gas. Therefore, it is better to make transactions on Saturday and Sunday.
The smallest commissions are observed from 12 am to 4 am GMT. At this time, users from the US are still sleeping, Europeans have not yet woken up, and Asians are already finishing work. Therefore, the load on the blockchain is minimal