Gas Fees and Gas Tokens are usually two words that mostly confuse newbies in the crypto space and most often time they don't really get the concept of gas fee and why it is important to the Blockchain Network.
This article simplifies what gas fees and gas tokens are as well as how it work on a Blockchain network.
WHAT ARE GAS FEE?
Gas fees are transaction fees that users pay to process transactions or execute smart contracts on a blockchain network. The fees serve as compensation to validators who handle transactions and add them to the blockchain and they are priced in tiny fractions of the cryptocurrency denominations called Gwei.
HOW IS GAS FEE DETERMINED ?
Gas fee is a measure of how much it will cost you to transact on particular blockchain network and the exact price of the gas is determined by supply, demand, and network capacity at the time of the transaction.
It is important to know that gas fees fluctuate based on network demand and supply, but often increases when there are high congestions on the network.
WHAT ARE GAS TOKENS?
Gas tokens are the tokens used in paying for those transaction fees (gas fee) on a blockchain network.
Typically, every Layer 1 blockchain uses its native coin as the gas token. This means that the required token to pay for transaction fees differs depending on the Blockchain one is operating on.
FOR EXAMPLE:
- On Ethereum Network, gas fees are paid using their native token $ETH
- On Binance Smart Chain Network, gas fees are paid using their native token $BNB
- On Solana Network, gas fees are paid using their native token $SOL
- On Ton Blockchain, gas fees are paid using their native token $ TON
HOW TO AVOIDING HIGH GAS FEES
There are a couple of ways you can actually avoid paying high gas fees when carrying out a transaction on a Blockchain.
First, you can choose to carry out your transactions when the network is not too busy, this might seem challenging but not impossible. EtherScan provides a gas tracker that shows the days high, low, and average gas fees, so you can try to time your necessary transactions using its tracker.
Second, you can also use Layer 2 Network solutions or dApps to carry out your transactions which helps to take off your activities from the main chain.
REASON FOR THE HIGH GAS FEES
High Ethereum Blockchain transaction fees are the result of network traffic and validator availability. When there is more traffic, the gas fees become higher and then become lower when there is less traffic.
CONCLUSION:
Gas fees are very necessary fees to pay when carrying out any transaction Onchain irrespective of the network as theses fees are used to incentivize users who stake their coins as they are being given small payments as a reward for helping to secure the blockchain and help it function well.
