Ethereum gas fees are the necessary cost that the network requires to perform transactions. In Ethereum, all transactions have a fee, which is paid in gas. Gas refers to the amount of ETH any user must pay to execute the blockchain transaction on Ethereum successfully. This fee acts as compensation for Ethereum miners and additionally, a security layer.Despite its effective purpose, gas fees can be absurdly expensive to interact with the Ethereum network.
Generally, gas fees are not fixed. This cost is set by the network supply and demand which can depend on:
The metrics used for gas fees is a system of denominated units “Wei” and 1ETH = 1 quintillion wei. Nevertheless, the most common denomination used for gas fees is gigawei (Wei), or 1 billion Wei, 1ETH = 1 billion gwei. With this system, when you take a look at a gas tracker Etherscan, you can see the average gas for a transaction is 69gwei for a transaction (at press time). However, the total fees include the Gas unit (limits) * (Base fee + Priority fee)
Because gas fees are calculated through an ETH’s denomination, therefore with the rise of ETH cost, the gas fees will cost more. In November 2021, ETH hit its all-time high at 4,426USD, which is over a 700% increase in one year.
Additionally, the total transaction fee is dynamic. With the increasing demand for Ethereum blockchain, the minimum amount of required gas also increased. Currently, there are almost 4000 Dapps (Decentralized applications) running on the Ethereum blockchain. Dapps alone can account for over 800 thousand transactions daily in the network.
Generally, gas fees can be extremely high due to the rapid increase in Ethereum’s activity. Through the rise of Dapp, the network quickly became congested, and the gas prices skyrocketed. Compared to 2020, ETH gas fees have increased more than 20 times.One prime example of blockchain popularity is the NFT use case. NFT is a non-fungible token, registered on the blockchain. These tokens have a unique asset with only 1 owner. The value of NFTs can fluctuate over time. 2021 marked the skyrocket of NFTs representation as digital art, this ranges from fashion pieces to a tweet. Anyone can create NFT, buy and sell it with specialized blockchain platforms such as OpenSea or Axie. This high activity has affected the huge inflation of gas fees recently. Furthermore, it can also significantly slow down the platform.
It is essential that Ethereum find its way to scale the platform. Introducing Ethereum 2.0. In this update, the blockchain will move to a Proof of stake mechanism, which can help reduce drastically the current gas fees as well as address the current scaling issue. However, the roadmap for this release has not been met. According to the Ethereum Foundation, Ethereum 2.0 will be ready in 2022, nevertheless, there have been many delays.
Waiting for the Ethereum 2.0 update is one way to get lower gas fees. However, the alternative answer is already here: Blockchain layer 2 solutions.As explained in the name itself, layer 2 solutions are off-chain that run on top of Ethereum’s main chain. While optimizing Ethereum Mainnet, these layer 2 solutions do not require changes in the base; rather, they stay and work on top of the Mainnet as smart contracts. Additionally, layer 2 can interact with the main chain without any modifications.Layer 2 roll-up like BLOOCK is already available to deploy with similar optimal results to Ethereum 2.0. Because of its nature, L2 solutions can reduce the gas fees by interacting with the Ethereum network only when the transaction is being validated.
Working on top of the Ethereum network, BLOOCK maximizes the value of the Ethereum connection while minimizing all the frictions.
For further information on how BLOOCK