5 tips to save on Ethereum gas fees
Updated: Nov 3, 2021
With demand for the Ethereum network hitting new highs, Ethereum gas prices have become somewhat painful. With significant transaction fees for even the simplest of transactions can eat into your profits and can be infuriating for any crypto enthusiast who is looking to utilize the network. This short article explores several strategies that you can adopt to lower and mitigate your gas expenses.
Ethereum Gas 101
Gas is a fundamental component of the Ethereum network. Simply put, it is the amount of ETH that users pay to perform an activity on the network. On a more technical level, gas is a unit of measurement that tracks how much it costs to execute computation for a specific action on Ethereum. For example sending ETH from one address to another, trading a DeFi token, minting an NFT, or deploying a smart contract on the blockchain.
You might be wondering: why have gas fees at all. Well, they actually play an important role in helping Ethereum operate effectively as the gas fees prevent spam transactions as well as pay miners (and soon stakers with the merger of Eth2) in return for securing the network.
Gas is how you are able to access decentralized computation on Ethereum, and it’s also part of what makes this computation possible. Gas is denominated in Gwei, which is the equivalent to 0.000000001 ETH.
If you hear someone saying “gas is 70 right now,” they are referring to the fact that you can expect to successfully complete an Ethereum transaction for ~70 Gwei. However, this doesn’t mean you multiply 70 by 0.000000001 ETH to determine the gas fee. This is where Ethereum’s gas limit comes into effect.
The gas limit, which is currently 15 million units, determines a c
eiling for how much gas can be spent in one Ethereum block on the blockchain. There is also a gas limit for particular types of transactions, for example a basic ETH transfer from one address to another has a gas limit of 21,000 units.
So to calculate the gas fee of a particular activity, you simply take a transaction’s gas limit and multiply it by the current gwei price.
Let’s consider there is a 21,000 gas limit and the amount of Gwei needed to perform the transaction is 50 Gwei.
To calculate the gas fee: