What are Gas Fees?

What are Gas Fees?
When it comes to Gas fees, most investors familiar with the cryptocurrency world have heard of this concept. However, many may not be aware of the origin of its name. Gas fees are essentially a term used to describe the cost associated with executing specific operations on the Ethereum blockchain. The term “Gas” is analogous to the gasoline used in cars — it’s required for the normal operation of various applications built on a blockchain. Thus, Gas fees cover these operational costs.
As we know, Ethereum is a global open-source platform used for creating smart contracts and decentralized applications (DApps). Ether (ETH) is Ethereum’s native cryptocurrency used to pay for transaction fees — these fees are known as Gas fees. Whenever you perform activities like transferring ETH or its tokens, interacting with smart contracts, or using DApps on the Ethereum network, you need to pay these transaction fees in ETH.
Although we’ve used Ethereum as an example, other blockchains function similarly, with each using its own native cryptocurrency for transaction fees, like Binance Smart Chain (BNB), Bitcoin (BTC), FAB public chain (FAB), Arbitrum (ARB), Tron (TRX), Solana (SOL), etc.

Ethereum Gas Fee Insights
Let’s continue using Ethereum as our example. As mentioned earlier, any activity on the blockchain, such as transfers, executing smart contracts, or interacting with DApps, requires you to pay the relevant transaction fee. Even if a transaction fails, you still need to pay a fee in ETH.
You might be most interested in the specific cost of Gas fees because the more Gas you use, the higher your fees will be. We’ve all seen how Gas fees for Ethereum transactions can sometimes be very high, ranging from tens of dollars to over a hundred dollars. Why does this happen?
Here’s how Gas fees typically work in the Ethereum network:

1. Initially, all transactions are sent to Ethereum’s memory pool (mempool), where they await processing by miners. Miners take these transactions from the mempool and include them in the next Ethereum block.
2. Crucially, miners are motivated by incentives and tend to prioritize transactions with higher Gas fees during certain periods. This means they typically choose transactions that offer the highest Gas prices at the moment.

Gas fee increases are closely related to Ethereum’s network activity. For instance, if there’s a sudden surge in activity on the Ethereum network due to a thriving ecosystem, with many users interacting with it, transactions with higher Gas prices are processed first.
The main reason behind this is inherent to Ethereum’s protocol:
Ethereum has limitations on the number of transactions that can be included in each block. This means that each Ethereum block can only carry a limited amount of information, resulting in network congestion when there are too many transactions to process. To avoid getting stuck, you must increase your Gas fee, as mentioned earlier.
To illustrate, consider a simple example where the memory pool contains only straightforward ETH transactions, each of which consumes 21,000 Gas. A miner can package up to 595 such transactions. If there are 1,000 pending transactions in the memory pool, miners sort them by Gas price, and they select the top 595 transactions with the highest fees to include in a block.
Currently, Ethereum’s Gas fee model operates on a simple auction mechanism:

To ensure that your transaction gets prioritized by miners, you must offer a higher Gas fee than others. In this way, Gas fees rise in response to users seeking priority processing, especially when many users have urgent transactions.

Another significant factor contributing to increased Ethereum Gas fees is the skyrocketing price of ETH itself. As we mentioned earlier, Gas fees are paid in ETH, so an increase in ETH’s price leads to a rise in Gas fees.
Additionally, we’ve compiled a list of important Gas fee-related terms that you may encounter when using wallets like Metamask or other wallet applications:

• Gwei: Gas prices are typically measured in Gwei, where 1 Gwei equals 0.000000001 ETH.
• Gas Price: This represents the price per unit of Gas when initiating a transaction or interacting with a smart contract. You can set your Gas Price before sending a transaction or interacting with a contract. You can adjust the miner fee using the Gas Price, and miners tend to prioritize transactions with higher Gas Prices. You can check Ethereum’s Gas Price at https://ethgasstation.info and modify it as needed. However, be cautious, as modifying the Gas Price can sometimes lead to transaction delays or getting stuck. If you find your transaction stuck due to a low Gas Price, increasing it beyond the default level may help get it processed more quickly.
• Gas Fee: The Gas Fee is calculated as Gas Limit multiplied by Gas Price, representing the maximum cost that a transaction or contract call can incur.

The content provided above covers the details of Gas fees, and it’s important for users to understand these fees. Many investors in the Ethereum network seek to reduce their transaction costs as much as possible. While many hope that Ethereum will employ layer 2 scaling solutions to lower transaction fees, several alternative strategies can already help reduce costs on the main network. For example, users can time their transactions during periods of the lowest Gas prices, check the estimated Gas fee in their wallets using specialized software, and even adjust their fees to lower values. However, please be cautious when using this method, as it can sometimes result in transaction delays or even prolonged periods of being stuck. If your transaction is stuck, increasing the Gas fee beyond the default level may prompt miners to process it quickly.
Is FAB Public Chain Similar?
The FAB public chain also operates with Gas fees for transactions, transfers, and interactions within its ecosystem. However, FAB boasts unique features that distinguish it from Ethereum and other blockchains:

1. FAB employs a unified architecture, with all ecosystem applications running on sidechains. This design allows FAB to achieve high scalability, handling millions of transactions per second, and providing rapid transaction speeds of around 2 seconds per transaction. Additionally, Gas fees on the FAB public chain are currently extremely low, roughly around 0.002 cents or even less.
2. FAB’s official team often provides Gas fees for free to users. You receive a small amount of FAB as Gas fees, allowing you to carry out numerous transactions without having to pay fees out of your own pocket.
3. The FAB public chain separates Gas fees from regular transactions. Users are not required to attach Gas fees to every transaction. Instead, you can receive Gas for free or add it as needed. FAB utilizes the KanBan protocol and other technologies, enabling users to conduct a vast number of transactions and interactions with minimal Gas fees.

In summary, the FAB public chain offers scalability, speed, and low Gas fees for large-scale business applications while avoiding the high fees associated with Ethereum and other blockchains.

Thanks for reading.