Gas fee: how to set and calculate the commission in blockchain networks

What is the gas fee?

Gas fee is a kind of “fuel” charge that users pay to validators for performing certain actions on the blockchain, such as executing smart contracts or transferring tokens. Each transaction on the network consumes computational resources, and validators incur corresponding costs. Therefore, to compensate for these expenses, users must pay a fee known as gas fee.

Depending on the blockchain network used, gas fees may be charged in various tokens. For example, in the Ethereum network, it is paid in ETH, in BNB Chain - in BNB, and so on.

Validators charge a fee for performing any operations on the blockchain: executing transactions, deploying smart contracts, using decentralized applications, and storing data. They verify transactions and determine which ones will be included in new blocks. The fee is charged regardless of the success of the transaction, as even in the case of failure, validators must verify and process the operation, which requires computational costs.

Gas Fee Functions

Paying gas fees ensures the functioning of the blockchain network, motivating validators to perform computations and also serving as protection against malicious transactions. However, during network congestion, this often leads to high fees, which creates difficulties for users.

Reasons for Gas Fee Fluctuations

The gas fee is determined by two main factors:

• The complexity of the operation ( may involve multiple transactions simultaneously )
• Network congestion

Operation difficulty

The complexity of a transaction or contract affects the final gas fee. The more complicated the operation (, for example, multiple transactions within a single contract ), the higher the likelihood of a high fee.

Network congestion

During a blockchain network overload, a large number of transactions accumulate in the processing queue. In such periods, the gas fee rises as validators tend to prioritize operations with higher fees to receive greater rewards.

Gas Fee Calculation

Let's consider an example of sending ETH through Gate. On the transaction confirmation screen, the estimated processing fee for the operation is displayed. The user can choose to increase the transaction speed by raising the fee based on preset parameters.

After sending the transaction, you can check the actual gas fee using the block explorer. Simply enter the transaction hash in the search bar to obtain detailed information.

Transaction fee (Tx Fee) = Gas limit * Gas price

Gas Price

The gas price is the amount of tokens that a user is willing to pay for each unit of gas. In the Ethereum network, for example, the unit Gwei is used, where 1 Gwei = 0.000000001 ETH. Thus, a gas price of 20 Gwei is equal to 0.00000002 ETH per unit of gas.

To speed up transaction processing by validators, a higher gas price can be set. However, if the priority is savings, the gas price can be reduced, which will, however, increase the transaction processing time.

Gas Limit

The gas limit is the maximum amount of gas units that a user is willing to spend on a transaction. This helps avoid errors in contracts. However, simply lowering the gas limit is not an effective way to save. Users should include enough gas to cover the computational resources used; otherwise, the transaction may fail due to insufficient gas.

The actual consumed fee will be deducted and used as a reward for the validators. If the transaction is completed and the consumed gas has not reached the set limit, the fee is charged only for the actually used gas.

The standard gas limit for regular transactions is 21,000 units.

Example of commission calculation

If we draw an analogy with refueling a car, the “gas limit” can be compared to the volume of the fuel tank, while the “gas price” is like the cost per liter of fuel. Suppose 21,000 liters are needed for the trip, and the price per liter is 20 rubles. Then the total cost of fuel will be 21,000 liters * 20 rubles = 420,000 rubles.

Similarly, the transaction fee in ETH will be 21,000 ( gas limit ) * 20 Gwei ( gas price ) = 420,000 Gwei. Therefore, the transaction fee Tx Fee = 420,000 * 0.000000001 ETH = 0.00042 ETH.

Conclusion

In this article, we discussed the concepts of gas, gas price, and gas limit in blockchain networks, as well as the methods for calculating transaction fees. For urgent operations, it is recommended to set a higher gas price to ensure the transaction is processed faster. If urgency is not critical, it is sufficient to set an adequate gas price to guarantee the transaction is processed in a reasonable time.