What is Gas Price?
A gas price is the amount of ETH (in a smaller unit of ETH called gwei or nanoeth) that must be paid to miners for processing transactions on the Ethereum Blockchain. One gwei equals 0.000000001 ETH. It is the pricing value required to successfully conduct a transaction or execute a contract on the Ethereum blockchain.
Typically, gas price is defined by a special kind of mechanism. How this works is that miners look for the highest fees attached to a transaction, then they begin to process the transactions in a descending order.
Gas prices vary greatly over time and tend to be higher when there are a lot of activities in the Blockchain. Similarly, gas prices reduce when the network is not clogged with activities. The exact price of the gas is determined by supply and demand between the network’s miners, who can decline to process a transaction if the gas price does not meet their limit.
Excessive gas prices have been a major concern for Ethereum users for a long time, and it limits the network’s ability to scale. As more popular DeFi projects, DApps and decentralized exchanges (DEX) like Uniswap and SushiSwap operate on Ethereum, the more “congested” the network becomes and the higher gas prices become.
What gas price should I use?
There are no specific rules to follow when it comes to setting a gas price. It’s totally up to you. Some helpful guidelines exist on how to set it right. It’s important to note that the higher the gas price you set, the faster your transaction will get processed.
So, if you have more important transactions to make on Ethereum, you can set a higher gas price to process it quickly. If you have smaller transactions to make that aren’t time sensitive, you can use a lower gas fee but the transaction will take a longer time to process.
How are gas prices calculated?
Gas prices are defined by several factors like the current price of ETH, the complexity of the transaction, and the number of people transacting at the time of your transaction. Most wallets that support ETH and Ethereum based tokens enable you to determine the speed of your transaction and calculate the required amount of GWEI necessary to process your request.
Gas price is measured in GWEI. One GWEI is one-billionth of an Ether or 0.000000001 ETH. So, if something costs 0.000000001 ETH, that means it costs 1 GWEI.
Every transaction requires at least 21,000 gallons of gas, and the price of gas per gallon on April 1, 2021, was 191.87 GWEI. You need to multiply that by the current cost of Ether, to get the least amount of gas price for a transaction.