Ethereum is the most popular blockchain network, surpassing Bitcoin in terms of transfer of value. Its continued success, however, has not been without its setbacks. High Ethereum gas fees and significant wait times for transaction processing have been a common grumble for Ethereum blockchain users.
While the Ethereum network has made a lot of progress with The Merge, Shanghai upgrade, and most recently, the Pectra upgrade. However, there is still a long way to go to solve all the scalability issues that the network faces. Fortunately, in addition to the emergence of layer-2 blockchains, there are more upgrades planned, and several of them focus on scalability.
Let’s look at how Ethereum gas works and what these upgrades are likely to change.
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Ethereum gas fees are the cost to execute a transaction on the Ethereum blockchain. More than 1 million transactions take place on the Ethereum network on a daily basis, proof that Ethereum offers massive utility rather than just speculation on price. But even with all the upgrades to the network, these transactions aren’t free.
Gas fees still need to be paid in Ethereum’s native token, called Ether ($ETH).
Gas fees enable the network to perform simple transactions, such as sending ETH from wallet A to wallet B or swapping tokens, to more complex transactions, such as claiming a yield through a smart contract. These complex operations increase the amount of gas required.
More complex transactions require more gas because they require more computational effort from the network.
But Ethereum gas costs are also driven by network traffic:
Some apps and wallets show a measurement of this cost called Gwei, also known as nanoether. One Gwei represents 1 billionth of an ETH. (Another term you may see is Wei, which is the smallest denomination of Ether though it is rarely used.)
Example: 50 Gwei = 0.000000050 ETH
Since gas usage and prices are ever-changing on Ethereum, we need a way to track them. That’s where the Ethereum gas chart and tracker come in: The ETH gas price chart allows anyone to see the current Ethereum gas price in real time.
The ETH gas price is a culmination of the amount of transactions happening at one time on the network, as well as the type of transactions occurring. Each type of transaction on the blockchain requires a different amount of gas and impacts the network’s congestion differently.
For example, it can be very cheap to swap ETH on Milk Road Swap and won’t impact the network much. However, if you deploy a smart contract, or everyone is rushing to mint an NFT at the same time, gas prices can skyrocket quickly, and transaction speed may slow.
Checking the Ethereum gas price chart before transacting can help you save money and ensure your transaction goes through promptly. If you are an active DeFi user, being in the habit of checking the ETH gas price chart and paying lower transaction costs can really add up over time.
Lastly, being familiar with Ethereum gas prices can give you insights into market activity and network sentiment. Higher ETH gas prices signify that there is excitement on the network and there may be something to pay attention to.
Now that we understand the importance of tracking gas, we need to be familiar with reading an ETH gas fees chart. And when it comes to Ethereum gas fee charts, we have two that we like to watch closely:
1/ The line chart at the top details gas prices over the last week: This ETH gas fee chart can be effective for seeing how busy Ethereum’s network has been during the last 7-day period.
Looking at this ETH gas chart, you can use spikes to determine when a major event may have happened on the network. It also complements our heat map chart, showing the times of day and days of the week when gas prices are typically the cheapest.
2/ The other Ethereum gas fee chart we like to watch is our heat map. This heat map uses historical data to visualize the busiest times on the Ethereum blockchain. Simply line up a day of the week and time, and measure historic congestion based on how red the box is.
Using this data, we can confidently say that the most ideal time to transact on the network is on the weekends. If you are transacting mid-week, your best bet is early morning or late at night (U.S. EST).
The Ethereum blockchain is similar to a highway. At 2 AM, there’s less traffic and smooth sailing. At rush hour, the highway gets congested and users pay a higher toll. On crypto networks, expect to pay more as more users want to push through their transactions.
The Ethereum gas price and fees are determined by supply and demand. Ethereum users create the demand, while it is up to the network validation nodes to supply them with confirmed transactions.
Modern Ethereum wallets, like Rabby or Metamask, allow users to adjust gas fees to prioritize their transactions. In Rabby wallet you can choose your level of gas fee of Normal, Fast, or Instant, increasing in cost the faster the transaction. In Metamask you can choose Low, Market, or Aggressive.
Think of it like buying a first-class ticket on an airline. First-class travel costs more but first-class passengers depart the plane first while the rest of the passengers crowd in to the aisle and wait for the line to move.
The analogy isn’t perfect, however, because using a lower gas fee can cause your transaction to get stuck in the mempool (a database of unconfirmed transactions) if gas prices change and your fee is now too low. The transaction stays in mempool limbo until gas prices fall enough to confirm the transaction. If the gas fee is too low, transactions may fail.
Remember, gas is paid in ETH (Ether), so the price of ETH itself plays a role.
Therefore, there are a few elements that can cause the price of gas fees to fluctuate:
The Merge has garnered near-mythical status in the crypto community. This is partly because it had been touted for release since 2017 (finally arriving in 2023).
Here’s what The Merge accomplished:
So, did The Merge help gas costs? Not really.
The Merge did bring slightly quicker confirmations and a less inflationary ETH supply (as well as a planet-friendly consensus method). But the changed consensus method didn’t help the network’s capacity.
Despite this, there is a silver lining. While The Merge may not impact gas fees, the use of roll-up technology can. Roll-ups are Layer-2 solutions that help transactions be processed off-chain.
They support scaling the Ethereum network and reducing costs. Ethereum co-founder Vitalik Buterin sees the benefit of these and believes that in the near future, gas fees for a transaction could be as low as a few USD cents.
Zero-Knowledge rollup networks like Polygon ZkEVM and ZkSync are already live, and Optimistic rollup networks like Arbitrum and Optimism continue to grow in popularity, bringing lower fees while using the Ethereum network to secure transactions.
While Layer-2 solutions may eventually reduce gas fees, it’s important to know what to do as an Ethereum user until then. Here are some strategies that may go a long way in reducing your costs.
You can use online tools like the charts at the top of the page to predict the time of day when Ethereum transactions will be more infrequent. If you’re not in a hurry and you manage to time your action just right, you could cut your gas fee costs significantly.
In order to reduce gas fees, it is essential to know how much these will actually be. Several online tools, such as Tenderly and DeFi Saver, allow users to simulate a crypto transaction. You can also see the estimated cost of the transaction in full-featured ETH wallets like MetaMask if you’re connected to a dApp.
Several dApps now exist with the direct purpose of helping you reduce the cost of transactions on the Ethereum network. For example, Rook helps bundle transactions together, thereby reducing fees. Similarly, using Balancer’s crypto vault can significantly reduce gas fees.
Ethereum’s position in the crypto ecosystem is unlikely to change for a while yet. Still, new blockchain networks have appeared in recent years, which offer much lower transaction fees and can process more transactions at higher speeds. The Solana network, for example, charges around $0.00025 per transaction. Cardano, NEAR Protocol, or Binance Smart Chain are other alternatives to consider.
Ethereum gas prices tend to increase because of two factors: growth of the value of Ethereum cryptocurrency and an increase in demand for the Ethereum blockchain network. Simply put, gas fees are high because a lot of people wish to use the network.
Ethereum gas prices vary a lot, even from one hour to another. Statistically, it’s been shown that the lowest gas prices can be found in the mornings and on the weekends.
It is likely that Sharding technology, together with Layer-2 solutions, will help to eventually drive down the price of gas fees on the Ethereum network.
You can use several strategies to pay lower Ethereum gas fees. These include: using Layer-2 solutions or choosing a time for the transaction when traffic is lower.<iframe width=”560″ height=”315″ src=”https://www.youtube.com/embed/Hgb3Xu-VmjM?si=lga3xYc6uGrrIW9U” title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen></iframe>
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