Posts about Ethereum
I often see people confused about how Ethereum fees work or why transactions fail. So let's try to explain everything you need to know about Ethereum gas fees!
The concept is also true for sidechains and L2s like Polygon and Arbitrum (Nova)! Especially when I talk about failed transactions and how to fix it, this is more intended for cheap L2s and not the main-chain where each mistake costs you 10$!
Note only the first three paragraphs are required for the basics, the later part explains why the most common problems happen and how to resolve them.
Simply speaking: Gas is the amount of work a certain transaction causes for the network. This will only depend on the transaction, and be fully independent of the current load of the network. Some examples can be seen in this table:
| Type | Gas |
|---|---|
| ETH transfer | 21,000 |
| ERC20 token transfer | ~50,000 |
| Uniswap V2 Swap | ~105,000 |
| Uniswap V2 Add Liquidity | ~130,000 |
| Uniswap V3 Swap | ~130,000 |
| Uniswap V3 Add Liquidity | ~450,000 |
As you see, the only thing that can be exactly estimated is an ETH transfer, this is the minimum fee. Different token contracts can require different fees and for DEXes the gas fee can even vary a lot more.
You have basically no control over the gas usage, your wallet will automatically set a gas limit. We will look into this later again.
The gas fee is the amount of Gwei you pay per unit of gas your transaction consumes. This will depend on the current load of the network and is basically "auctioned", meaning the validators will include the transactions with the highest gas fees. You can see an estimate for the current gas fees on gas trackers like the one from Etherscan.
One Gwei is 10-9 ETH = 0.000000001 ETH.
Simplified, you will pay one gas fee per unit of gas your transaction consumes:
Fee = Gas Units * Gas Fee.
The London upgrade changed this forumula a little bit by splitting the gas fee into base fee and priority fee:
Fee = Gas Units * (Base Fee + Priority Fee)
Your "max base fee" must be larger than the Base Fee set by the network, and your Priority fee is the tip you give the validator. The larger the tip, the more likely you will be included, especially in congested times.
Note if the Max Base Fee is higher than the actual Base Fee, the difference will be refunded to you. The priority fee will always be paid.
Let's say you make a Swap for 105,000 gas and the fee is 50 Gwei. The fee for the transaction is 105,000 * 50 Gwei = 5.25m Gwei = 0.00525 ETH = ~10$
If your transaction is pending, you set either the Max Gas Fee or the Priority Fee too low. You can compare your transaction, which should already be visible on the block explorer, with a gas estimator to see where to problem is.
Especially if your Base Fee is too low, waiting will often not resolve the issue, you need to increase the fee. In Metamask you can do this pretty easy directly in the "Activity" tab by clicking on "Speed Up".
https://i.redd.it/wucuz8x18z2b1.pngThis will actually broadcast a new transaction with the same Nonce, effectively overwriting the old transaction. That's why even "Canceling" a transaction will still require a small fee, because this just replaces the transaction with a zero-transfer to self or similar.
If you want to make another transaction, you have to make sure you have no pending transaction left!
One important thing to understand: An ETH transaction fails because of the user and not because of the network. This can have different reasons, for example a critical error during a smart contract interaction, like a requirement missing or a bug.
Even if your transaction fails, you pay the fee. Some find this strange, but it actually makes perfect sense. The validator did the work, but the transaction failed because of an error (of the user!). The fee is the only thing that stops an attacker to spam the network with endless impossible transactions.
The reason this doesn't exist in Bitcoin: Bitcoin is not Turing Complete - if a transaction is valid or not can be determined by any node without needing a lot of computation power. In fact, a transaction can't fail on Bitcoin.
Any ETH transaction will include a gas limit - there is no way to know exactly how much gas a transaction will consume before it happens, so you set the maximum amount of gas a transaction is allowed to use up. No matter what happens, the tx will not consume more gas. Also a successful transaction will never consume more gas than it needs, no matter what the gas limit was set to.
This one is super important, because from my experience it's the #1 reason a user will encounter a failed transaction. Usually your wallet or the website you are connected to will estimate the gas limit correctly.
Sometimes however, especially after a contract got updated, a website will tell your wallet a wrong gas limit and the transaction will fail. Sadly, not all transactions will clearly say so on the block explorer. See this two trancactions which both failed because they ran out of gas:
Transaction 1: Failed because of gas limit, gives clear error messageTransaction 2: Failed because of gas limit, gives generic error messageIf you are not sure, you can check the actual gas limit in the failed transaction on a block explorer: A failed transaction with nearly 100% gas usage will often indicate your transaction actually ran out of gas:
To fix this, you have to broadcast the transaction again with a higher gas limit. If this happens on Nova, I usually just double the fee and this usually fixes the issue.
If you set the gas limit to 2x or 10x of the first value, your next transaction will also be 2x or 10x more in fees if it fails again. Strictly speaking, there can be different reasons for a transaction reaching the gas limit - like a tx caught in an infinite loop. So try at your own risk!
You can manually edit the gas fees (which consists of the base fee and priority fee) and gas limit in Metamask. The setting is a little hidden, but on each transaction you can reach it by first clickig at "Market" on the fee tab and then on "Advanced":
https://i.redd.it/9s45wa2o1z2b1.pngGas Fee estimator showing gas costs
Gas fees on Ethereum are actually pretty simple:
Your transaction consumes a certain amount of gas - more complex transactions (like a swap) require more gas than a simple transfer. The load of the network will determine the gas price.
In the end you pay the gas fee for each unit of gas your transaction consumes.
If your gas price is too low, your transaction will remain pending.
If your gas limit is too low, your transaction will fail.
This latest meme season has shown me Ethereum is unusable as a Layer 1 and you cannot change my mind
Opening disclosure: I do not promote you do the same, I have a very balanced portfolio but occasionally I will throw left over money into meme hype coins just for fun.
This topic is designed to show you how chasing the next meme coin could be an expensive lesson.
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It all started with Meme season 2021.
Looked at Shiba when it was 2-3 million market cap.
Looked at Safemoon when it was 10-20 million market cap.
I went with Safemoon for stupid money because the process of transferring my bank money to an exchange for BNB and then swapping from BNB to the meme token was very straight forward with maybe $3-4 gas fees tops.
Fast forward 2 years and PEPE and Eth based meme coins are back. Thought it was time I at least got involved; if at the very least to show me why I passed up on Shiba in 2021 (Eth being such a clunky, expensive experience).
Follow my journey - so you won't have to!
Part 1: A brand new adventure. Transfer a few spare bobs into Eth and find the next 1000x.
Part 2: Transfer that 0.11 Eth to UniSwap for a 0.00182 Eth Fee!
Part 3: Accidentally transfer all Eth in Wrapped Eth, so you cannot buy your Meme as you don't have another $20 Eth lying around as a gas fee. (**You will likely need to transfer Eth to Wrapped Eth in order to buy your low cap meme. This requires Eth, in this case, 0.0043 of it.)
Part 4: Having got this far, I knew I would now need to unwrap my Wrapped Eth back to Eth to re-do and have enough Eth to get the meme. But you won't have enough Eth to do this. You will then need to buy More Eth and repeat steps from Step 1 (and more fees).
Chances are by now, like me, having used quicker and leaner Layer 1's, you have now given up on Ethereum. And I don't blame you. I have given up on Ethereum.
Total Fee cost for the experience $55~
Total loss $250 ($200 of Wrapped Eth sitting on UniSwap).
Its 2023. Eth does not make decentralised money easier IMO.