Ethereum gas fees: What are gas prices, gas limits?
Cryptocurrencies might pose an alternative to conventional financial platforms that often boast low fees, but that doesn’t mean you can escape additional costs entirely. When it comes to using ETH, there’s no getting away from Ethereum gas fees. But don’t worry, they’re not as confusing as they seem at first glance.
Sky-high costs draining your Ethereum reserves and failed transactions. That’s what happens if you don’t understand how Ethereum gas fees work.
With the rise of DeFi, NFTs, and increased use of the Ethereum blockchain, many crypto newcomers are getting onto the blockchain. And they are discovering their small Ethereum holdings barely cover their transaction costs.
With recent ETH costs for complex transactions reaching heights of $200, a transaction done at the wrong time can do some serious damage to your earnings. To avoid messing up when you use the platform. Here’s a breakdown of what you need to know.
What are gas fees on Ethereum?
Gas fees are monetary amounts (in ETH) that you must pay to cover a transaction of the Ethereum network.
Simply defined, Ethereum gas is a unit of computational power. Transactions and smart contracts on Ethereum require significant power resources from the miners who run the network. Ethereum energy represents exactly how much is needed for each operation.
You pay these fees in ETH itself — or rather, in Gwei (a unit representing 0.000000001 ether). This sum goes directly to Ethereum miners, who receive an amount equivalent to the gas needed for the operation they executed.
Considering that in 2018, Ethereum used as much energy as the country of Iceland and it has only increased, you can imagine these fees get pretty steep.
In addition to keeping everything going, gas fees also keep the network secure by stopping people from spamming transactions to exploit the network. If spamming costs a lot of money, fewer people will want to do it.
What is the Ethereum gas limit?
On Ethereum, your gas limit is the maximum amount of gas you are willing to use on a transaction. While you may use less, the blockchain will cancel your transaction if you go past this amount.
To ensure that you don’t shell out more than you bargain for when carrying out a transaction, you can use an Ether gas limit as a safety mechanism. This ensures that you’ll never pay more than a fixed amount you choose yourself.
Ethereum’s default gas limit is 21,000 units, which is also the Ethereum minimum gas limit and the recommended gas limit on Ethereum (unless you plan on a very high-power transaction).
How to set gas limits on Ethereum?
The way to set your gas limit on Ethereum varies between apps and wallets. Usually, you’ll have an option to choose the amount when you select your recipient and the amount you’re sending with a slow, medium, and fast option.
In other scenarios, you may not have any options at all or be able to manually set your gas limit and gas price.
If you run out of gas on Ethereum during your transaction, miners will begin to execute the operation — but finish before they can complete it, resulting in a transaction error.
How much is gas on Ethereum?
The cost of a unit of gas on Ethereum changes depending on the value of ETH and the number of transactions taking place on the blockchain at any given time.
You can keep up with the current Ethereum gas prices on sites like Etherscan or other similar websites, but the average is somewhere between 160 and 180 gwei.
Wondering how to calculate your gas limit on Ethereum?
How are transaction fees calculated in Ethereum?
The Ethereum gas cost (also known as the transaction fee) is determined by multiplying the total gas used by the gas price paid. You can specify the maximum you’re willing to pay to avoid nasty surprises.
How to set gas prices on Ethereum
If the app you’re using allows you, you’ll set your gas price (how much you pay per unit of gas used in your transaction) right when you’re about to make a transaction on Ethereum along with the gas limit. Sometimes prices are fixed for you and other times you’ll have the chance to enter manually.
As you can see, transaction fees on Ethereum can be quite the headache, especially when you’re doing something simple like moving stablecoins around. Fortunately, there are solutions that can help you minimize costs.
Minimize stablecoin transfer fees when using MyConstant
Gas fees might be a necessary part of how Ethereum works, but that doesn’t mean you shouldn’t avoid them where possible. On MyConstant, we let you move the USD value of your account (in either USD or stablecoins) freely to other MyConstant accounts without worrying about transaction fees.
Our USD deposit account also boasts 4% APY — and lets you withdraw your balance at any time while charging no fees. This can help you quickly recoup any losses you might take when paying stablecoin transaction fees.
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