If you’re an active member in the Crypto community, you might be aware of raging and fearful gas fees (transaction fees), which are sky-rocketing .
We are frequently seeing 100 – 300 gwei(One gwei equals 0.000000001) resulting in 50-150 dollar prices on Ethereum’s Mainnet (Layer 1) at rush hour!
Also read: Smart contracts – explained in the simplest terms possible
What is the meaning of gas fees?
This gas fee isn’t gasoline for your car or gas you might be using to run your Computer.
The concept of gas was introduced to maintain a distinct value layer that solely indicates the consumption toward computational expenses on the Ethereum network. Having a separate unit for this purpose allows for a practical distinction between the actual valuation of the Crypto ETH, and the computational cost of using Ethereum’s virtual machine (EVM).
Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain. “Gas limit” refers to the maximum amount of gas (or energy) that you’re willing to spend on a particular transaction. Gas limits are higher when using ETH or smart contracts, meaning more work is needed to execute a transaction.
Why are the gas fees high?
Right now, Ethereum can handle about 30 transactions per second (TPS) at best; Visa, does about 1,700 transactions per second and claims it can handle up to 24,000.Cardano manages more than 250, while Solana at least 50,000 transactions per second (TPS).
Ethereum is up by more than 30% since last month, and has been in news both in and out of the Crypto-Blockchain community.
In periods of high gas prices, Ethereum’s massive use (success/adoption) is for DFI, NTFs mints (crazy), transactions by retailers and institutions.
The result is fees that are higher than some of us can afford.
Even under pressure, Ethereum is still able to work securely without errors. To help other projects such as ADA, ALGO, AVAX, Elrond, Tezos and ONE thrive, Ethereum must continue to prove blockchain and smart-contracts are secure and decentralized.
While we wait for ETH 2.0’s Sharding and the current L2 Rollups to take over , we have to look at other tricks and solutions. Which I’ll share in the next article.