Basic Crypto with the Beasts: What are gas fees?

What are gas fees in cryptocurrency transactions on the blockchain.

Something we see often talked about among web3 and crypto newbies is the concept of gas. To those of us that have been in the scene for a while, it seems simple and obvious, but many still ask “what are gas fees,” and “why do they exist?”

In this series entry, we’re going to explore just that and not just for a single chain (blockchain), but also a general definition that can be applied to any and all chains from Ethereum to Polygon.

Let’s dive in beasts.

Basic Crypto Guidance with the Beasts: Understanding gas fees

What are gas fees in cryptocurrency transactions on the blockchain.

Beasts need to eat, or rather they need fuel, just like vehicles need fuel to power the engine. In a very broad and simple form, that is precisely why gas exists on the blockchain.

It’s fuel for your web3 transactions.

But to understand it a little better, we have to dig — or paw — a little deeper.

What are gas fees?

Gas is used to control access to blockchain networks and drive transactions. Depending on the chain, and the type of transaction, you will pay a small amount of gas to push through whatever action you’re trying to achieve. If you’re minting a new NFT, for example, you’ll pay gas to mint and transfer that NFT to your wallet of choice. If you’re sending an NFT or some crypto to another user, you’ll pay gas on that transaction.

How are gas fees calculated?

Gas prices vary depending on the network and the current congestion, or rather the amount of traffic on the network. When things are busy, meaning more people are using the chain to transact, gas fees are higher.

Because blockchain transactions are computational events, gas limits define the total computational power cost of the transaction. On the Ethereum blockchain, every action — computational action — has a specific gas price.

Each transaction is assigned a “validator” who proposes a transaction to both successfully push it through and authenticate it on chain. Validators are registered participants who lend computational power to active transactions.

Where do the gas fees go?

On Ethereum, most of your gas fee is destroyed by the chain protocol, or burned. Another allotment, called the priority fee, is given to the validator who proposed your transaction. Higher gas fees, especially when the chain is busy, will encourage validators to move faster. This is what people mean when they say they’re “increasing” or “boosting” their gas fees. They’re paying more gas to validators to push through the transaction with a higher priority.

Gas may be handled differently for other chains.

How much gas do I need for each transaction?

Because gas varies based on the type of transaction and the time of the transaction — network congestion — we can’t give you an estimated amount for what you’re doing. It varies wildly, which is one of the unfortunate downsides to using certain networks like Ethereum. Other networks combat this problem by significantly reducing gas fees, such as Polygon where it costs cents compared to a few dollars or more on other chains.

What we can say is no matter what you’re doing, you need extra funds in your wallet to cover gas. If you have barely enough to cover what you’re doing, like minting a new NFT, you won’t be able to follow through with the transaction.

You can see how much ETH gas you need using the Etherscan Gas Tracker. There are similar tools for alternate blockchains.

Moreover, you should always use the recommended gas settings in wallets like Metamask. Changing the amounts could have unintended consequences — if you don’t have enough gas your transaction could fail.

Advanced users with lots of on-chain and transactional experience may adjust these gas prices, especially during down times, to reduce how much they’re paying.

Before a transaction goes through, you’ll always be asked to confirm the price and fees of any transaction. This is true for any wallet you use, from Metamask to Trust Wallet and beyond.