The gas fee on a blockchain is the cost of executing a transaction on that blockchain. If you’ve heard recently, the cost of minting NFTs in the Ethereum blockchain has cost hundreds of dollars. The gas fees also go up and down depending on the network traffic and the size of the transaction. The larger the transaction (data) size, the more the fees. The higher the network traffic, the more the fees.
If you’re a software developer and want to build your next blockchain dApp, you want to make sure you do not pick a product that has costly transactions. This article explains what gas fee is on a blockchain, why gas fees are, and which blockchains have the highest and the lowest gas fees.
What is Gas?
A blockchain is a distributed ledger (a database) stored on blockchain nodes. A blockchain node is run by an individual or a business that participates in the block validation and approval process. Once a block is approved, it is then stored on the blockchain. For validating and storage, the blockchain requires computing power and storage. To compensate users who run nodes, there is a payment in the form of blockchain tokens known as a transaction fee.
Gas on a blockchain refers to the unit of measurement for the computational work required to execute a transaction or smart contract on the blockchain. Gas is used to incentivize network participants, such as miners, to validate transactions and add them to the blockchain.
In most blockchain networks, gas is paid for using the network’s native cryptocurrency, such as Ether (ETH) on the Ethereum blockchain. Each operation on the blockchain consumes a certain amount of gas, and the higher the computational complexity of the operation, the more gas it will consume.
The gas helps to prevent spam and denial-of-service attacks on the blockchain network by making it expensive to execute large numbers of transactions or computationally-intensive smart contracts.
Gas for some blockchains is fixed per transaction and storage while others may vary depending on various factors, as mentioned earlier.
On the Ethereum network, Gas is the unit that measures the amount of computational power required to execute a specific operation on the network. The gas fee is the fee required to execute a transaction on Ethereum.
The following formula is used to calculate the gas fees:
Gas fee = Gas units * Gas price per unit
Gas fees of a blockchain are calculated in its native currency, i.e., ether (ETH) on Ethereum. Gas prices on Ethereum are represented in gwei (giga-wei).
1 gwei = 0.000000001 ETH (10-9 ETH)
1 gwei = 1,000,000,000 wei
Wei is the smallest unit of ETH.
Blockchain requires some code to be executed on a blockchain node.
Ethereum Virtual Machine (EVM) is the software that runs on a machine and performs.
Cost of a simple arithmetic operation such as Addition = 3 GAS
Cost of getting a balance on an account = 400 GAS
Cost of sending a transaction from one account to another = 21,000 GAS
A smart contract usually involves more than open operations. Depending on the complexity of the smart contract, the cost of a smart contract execution may be in several thousands GAS to millions.
Why is gas fee important?
Gas fees play a major role in total transaction costs. As you have heard, it can cost hundreds of dollars to execute a transaction on Ethereum. Imagine you’re building a blockchain application (dApp) that may have millions of transactions per day. You do not want to pay hundreds of dollars per transaction. You want to use a blockchain that costs you a fraction of a dollar.
In my case, I’m building an application that can have millions of transactions per day. That means I can’t afford to use a blockchain with higher gas fees.
You can think of gas fees as the cost of hosting and computing on a cloud. Instead of using a cloud service provider, in the case of a blockchain, the service providers are blockchain nodes.
What are the gas fees on various blockchains?
Gas fees can vary significantly across different blockchain networks, depending on factors such as the network’s design, transaction throughput, and demand from users. Here are some examples of gas fees on popular blockchain networks:
Ethereum: Gas fees on the Ethereum blockchain are denominated in ether (ETH) and can range from a few cents to hundreds of dollars depending on network congestion. During periods of high demand, gas fees can spike significantly, making it expensive to execute transactions or smart contracts. For example, during the peak of the DeFi boom in 2020, gas fees on Ethereum reached over 1,000 gwei (a unit of ether) per transaction.
Binance Smart Chain: Binance Smart Chain is a blockchain network that is compatible with the Ethereum Virtual Machine and uses the same gas fee system as Ethereum. However, gas fees on Binance Smart Chain are generally lower than on Ethereum due to the network’s higher transaction throughput. Gas fees on Binance Smart Chain can range from a few cents to a few dollars.
Polygon: Polygon is a layer 2 scaling solution for Ethereum that offers faster transaction times and lower gas fees than the Ethereum mainnet. Gas fees on Polygon are denominated in MATIC, the network’s native cryptocurrency, and can range from fractions of a cent to a few cents.
Solana: Solana is a high-performance blockchain that uses a different consensus mechanism than Ethereum and offers faster transaction times and lower gas fees. Gas fees on Solana are denominated in SOL, the network’s native cryptocurrency, and are generally much lower than on Ethereum. Gas fees on Solana can range from fractions of a cent to a few cents.
Near: Near is a blockchain platform that uses a proof-of-stake consensus mechanism and charges transaction fees in the network’s native cryptocurrency, NEAR. The gas fees on Near are dynamic and are determined by market demand. The average gas fee on Near is around 0.001 NEAR, or a fraction of a cent.
Polkadot: Polkadot is a shared blockchain platform that allows interoperability between different blockchain networks. Gas fees on Polkadot are denominated in DOT, the network’s native cryptocurrency, and are determined by a Dutch auction system, where users bid for block space. The average gas fee on Polkadot was around 0.003 DOT or a few cents.
Stratis: Stratis is a blockchain platform that uses a proof-of-stake consensus mechanism and charges transaction fees in the network’s native cryptocurrency, STRAX. The gas fees on Stratis are fixed and are not affected by network demand. The gas fee on Stratis was 0.0001 STRAX or a fraction of a cent.
Algorand: Algorand is a blockchain platform that uses a proof-of-stake consensus mechanism and charges transaction fees in the network’s native cryptocurrency, ALGO. The gas fees in Algorand are dynamic and are determined by market demand. The average gas fee in Algorand was around 0.001 ALGO or a fraction of a cent.
Here is a list of some of the top blockchains and their gas fees:
| Blockchain | Protocol | TPS | Avg Fees/Tx |
|---|---|---|---|
| Avalanche | PoS | 4,500 | 0.001 AVAX |
| Binance | PoSA (Proof of Stack Authority) | 100 | 0.005 BNB |
| Bitcoin | Proof of Work (PoW) | 3-7 | 40-50 sats/byte |
| Ethereum | Proof of Work, PoS (2.0) | 15-45, 100,000 (2.0) | 50-150 Gwei |
| Solana | Proof of Stake & Proof of History | 65,000 | 0.000005 SOL |
| NEAR Protocol | PoS | 8,000 | 0.001 NEAR |
| Polygon | PoS | 7.000 | 5-10 Gwei |
| PolkaDot | PoS, NPoS | 1,000 | 0.0001 DOT |
| Algorand | Pure Proof of Stake (PPoS) | 1,000 | 0.001 ALGO |
| Stratis | PoS | 100 | 0.001 STRAX |
Conclusion
Blockchain gas fees are very important for the cost of dApps. If you are building a scalable dApp that may have a ton of transactions, you may want to make sure that you do not pick a blockchain with higher gas fees. I hope this article gave you information about the gas fees on various blockchains.
FAQs
Q. What are blockchain gas fees?
A. Gas fees are transaction fees that users pay to miners on a blockchain network in exchange for their transactions being processed and validated. Gas fees are typically paid in the blockchain’s native cryptocurrency as an incentive for miners to prioritize and include transactions in the blockchain.
Q. Why do gas fees differ between blockchains?
A. Because of differences in network congestion, block size, and consensus mechanisms, gas fees vary across blockchains. Gas fees are typically higher on blockchains with high usage and limited block space, while gas fees may be lower on blockchains with larger block sizes or more efficient consensus algorithms.
Q. Which blockchain has the lowest gas fees right now?
A. Because gas fees can fluctuate depending on network conditions, it’s critical to check real-time data and compare gas fees across multiple blockchains. At the time of writing, however, blockchains such as Binance Smart Chain (BSC) and Polygon (formerly Matic Network) had gained popularity due to their lower gas fees when compared to Ethereum.
Q. Is Ethereum notorious for its high gas fees?
A. Yes, Ethereum has a reputation for charging exorbitant gas fees, especially during periods of high network congestion. The growing popularity of decentralized applications (DApps) and the Ethereum network’s limited block space have contributed to higher gas fees.
Q. How can I see the current gas fees on various blockchains?
A. Several blockchain explorers and analytics platforms provide real-time information on gas fees. Current gas fees, average transaction fees, and historical data are displayed on websites such as Etherscan for Ethereum and BscScan for Binance Smart Chain.
