![]() ![]() You can compare it to the speed at which cars can go on a congested road. Network congestion happens when too many people want to execute transactions at the same time. A block could theoretically contain only 714 transactions. On Ethereum, the number of transactions in a block is restricted by a gas limit, which ranges from 15 million to 30 million per block. ![]() The problem with modern blockchain networks is that they can only process a limited number of transactions per transaction block. The gas you pay for a transaction is simply the unit of cost that measures the computational effort it takes to execute certain actions on Ethereum. To get there, you need to pay a vignette to travel on the highway – because how else will it be maintained for you and thousands of other users?Įthereum’s on-chain roads also require maintenance for transactions – especially smart contracts –to be processed. You want to travel to Uniswap City™ to swap USDC for LINK. Imagine Ethereum being a giant highway connecting multiple cities. The network rewards the validator with gas fees, which the end-user pays to account for the computational value of his request. Someone (in Ethereum’s case, a validator) needs to perform this broadcasting, who in return requires monetary incentive for his actions. Transactions on a blockchain need to be broadcasted to the entire network in order to become a part of on-chain history. Today’s article discusses how Ethereum gas fees work, why they’re so high, and how to reduce them. However, we likely won’t see this ambitious feature launch in 2023.Īs an investor in the crypto space, it’s important for you to understand how your on-chain transactions are affected by gas fees and why. ![]() One major upgrade that’ll be launched in the future is proto-danksharding, which involves attaching blobs of data to transactions. The Ethereum foundation has several scalability features underway that’ll make the network faster, cheaper, and more efficient. Although heightened activity is always welcomed, the boom in fees doesn’t make it economically viable for anyone to use the chain. In fact, the blockchain is such a popular DeFi hotspot that it frequently experiences network congestion, causing higher transaction fees. Ethereum is crypto’s main hub for all your on-chain activities. ![]()
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