Gas price data provided by gasnow.org. Charts are set to your local timezone.
About this Data
The charts above use the “standard” gas price given by gasnow.org. This price is recommended for users who want their transaction to confirm in less than 5 minutes and is a good indicator of the fair gas price at the time. The heatmap calculates an average of these standard prices for each 1 hour window using data from the previous two weeks.
In 2021, Ethereum officially became the most popular blockchain network, surpassing Bitcoin in terms of transfer of value. Its continued success, however, has not been without its setbacks. High gas fees and significant wait time for transaction processing have been a regular source of irritation for Ethereum’s growing number of investors.
However, in 2022, Ethereum vows to introduce a number of significant upgrades. The most important of these has been dubbed The Merge by its developers. It may significantly affect the way you use the network and could even lower the value of gas fees that you’re likely to pay. Let’s look at how Ethereum gas works and what these upgrades are likely to change.
What is Ethereum Gas?
More than 1 million transactions take place on the Ethereum network on a daily basis. On Ethereum 1.0, these transactions and the security of the network are managed by nodes. These are computers that contribute their computations in the service of the network. The most important of these computers are known as Miners. These computers, essentially, need to prioritize transactions so that the blockchain does not get overheated.
The Ethereum gas fee is the cost required for a transaction to be added to the network. Miners are rewarded for their effort with crypto. Just how much Ethereum gas will be needed for a transaction depends on its complexity and on the network competition. This mining mechanism is called Proof-of-Work (PoW). It is very labor intensive, not to mention not very good for the environment. This is why Ethereum 2.0 will embrace a Proof-of-Stake (PoS) model instead. But we’ll talk more about that later.
You should remember, however, that the Ethereum gas fee will remain in place after The Merge, only that it will be used differently. Gas units are utilized to measure the miners’ contribution. A standard transaction requires 21,000 units, while more complex ones can require much more.
Since the gas is used to pay the aforementioned miners, it is crucial to know how much each will receive. This is done using a denomination of Ethereum known as Gwei. Also known as nanoether, this represents the one billionth part of an ETH. How much gwei does a miner receive? Using our previous example, for a standard transaction that required 21,000 units, a miner ought to receive 2,310,000 gwei, or 0.00231 ETH. But why then do Ethereum gas prices fluctuate?
Gas Prices are Dynamic
The Ethereum blockchain is similar to a walkway. When there are only a few people interested in using it, there is ample room for everyone to pass through it. However, when it gets crowded, real estate on it becomes more valuable and harder to procure.
The Ethereum gas price and fees are determined by supply and demand. Ethereum users create the demand, while it is up to the miners to supply them with confirmed transactions.
Prior to asking for a transaction to be confirmed, users must input their Ethereum gas limit. This shows how much they are willing to spend. When you set a higher gas limit (sometimes done automatically through the crypto wallet), the miners will be aware that there is more computational work to be done on their end.
This will convince them to remove it from the mempool (a database of unconfirmed transactions). Alternatively, they may ignore the ones that feature a low gas limit.
Therefore, there are a few elements that can cause the price of gas fees to fluctuate:
- Oscillation of the price of ETH since rewards are provided in the network’s native coin.
- Change in the demand for transactions to be confirmed. Higher volume and demand for quicker confirmations will drive up the price.
Block Gas Limit
If miners get rewarded for each new transaction that they help bring on to the network, the natural question is why they don’t simply process all of the transactions in the mempool and improve their earnings.
Like the aforementioned walkway that can quickly get crowded, blockchain networks also have limits. The Bitcoin network, which is restricted by its size in bytes, for example, has a limit of 7-8 transactions per second.
On the other hand, the Ethereum network is restricted by its gas limit. This represents the maximum amount of gas that transactions within a block can consume. This is designed to help increase transaction time and maintain the decentralized network.
The block gas limit is 30 million gas, although 15 million units of gas are a more realistic target. In theory, this means that up to 714 transactions could be included in such a block, provided that everyone paid 21,000 units of gas, and it took around 16 seconds for each block to be mined.
This, of course, is just an example as different amounts of gas will be used for each transaction.
In other words, the gas fee limit, together with a demand that has often caused the network to be congested, have contributed to the high gas fee prices. Furthermore, the high demand has meant that users have been willing to spend more gas in hopes that their transactions will be included in the following block to be confirmed.
One transaction will require multiple block confirmations (technically 14 for Ethereum, although trades on crypto exchanges will require upwards of 50). All of this indicates that setting lower gas fees may leave a transaction showing as pending or could cause it to fail altogether.
Are miners content with the limit of their rewards? Not all of them! This is the reason why the block gas limit has changed over the years. In 2015 it was only 5000 and was increased subsequently.
These measures have their detractors, as they not only help increase computation power and rewards but also add extra strain creating larger block sizes and increasing the time required to process transactions.
Ethereum gas prices after The Merge
The Merge has garnered near mythical status in the crypto community. This is in no small part due to the fact that it has been touted for release ever since 2017. In subsequent years the growth of the issues that it is meant to fix (lower gas fees, quicker transaction confirmations, a more environmentally friendly network) has only caused interest in it to grow.
The Merge is part of a set of upgrades made to the network. These have been dubbed Eth 2.0. The updates also include The Beacon Chain and Shard Chains. The Beacon Chain update has already introduced Proof-of-Stake to the network, and The Merge is expected to take place in September of 2022. The price of ETH in August 2022 varied between $1600 and $1800.
What will Ethereum 2.0 do to gas prices?
Most analysts expect that the introduction of Ethereum 2.0 will have a powerful impact on the world of crypto technology as a whole. Many also think that this could have an effect on reducing gas prices and increasing the value of the Ethereum cryptocurrency. While this is an optimistic point of view, these views are not necessarily rooted in facts.
There are a number of controversies that the Ethereum Foundation and its supporters have addressed in regards to The Merge.
Some of the issues that they have spoken about include:
- Transaction speeds won’t necessarily increase. The creation and settlement of blocks will occur quicker but likely, not fast enough to impact processing rates.
- Investors will have to wait in order to draw out their Ether until the next upgrade to the network.
- Gas fee prices may not change dramatically.
Indeed, while it is a topic that is heavily debated, many of those highly knowledgeable about the Ethereum network say that gas fees might not actually change immediately. This is due to the fact that shifting to Proof-of-Stake helps in a number of ways but does not involve expanding the network capacity.
Despite this, there is a silver lining. While The Merge may not impact gas fees, the use of roll-up technology will. Roll-ups are Layer-2 solutions that help transactions be processed off-chain.
They support scaling the Ethereum network and reducing costs. Ethereum co-founder Vitalik Buterin sees the benefit of these and believes that in the near future, gas fees for a transaction could be as low as a few USD cents.
Strategies to reduce gas costs
While sharding and Layer-2 solutions may eventually reduce gas fees, it’s important to know what to do as an Ethereum user until then. Here are some strategies that may go a long way in reducing your costs of using this blockchain network.
Utilize a Layer-2 solution
As we mentioned, Layer-2 solutions help reduce the burden placed on the network. They achieve this by moving the transaction information off-chain and then moving the results back onto the Ethereum network. L-2 solutions such as Optimism, Polygon, or Arbitrum are among the best of their kind, even receiving praise from Vitalik Buterin himself.
Choose the right moment
The Ethereum network might be comparable to a highly popular walkway most of the time, but it is not always this way. You can use online tools that will predict the time of day when Ethereum transactions will be more infrequent. If you’re not in a great hurry and you manage to time your action just right, you could potentially cut your gas fee costs in half.
Simulate the transaction
In order to reduce gas fees, it is essential to first know how much these will actually be. Several online tools, such as Tenderly, DeFI Saver, and others allow users to simulate a crypto transaction. This not only allows them to fix potential bugs but should also reveal to them the cost of a transaction under given parameters.
Use Ethereum’s storage refund
Network nodes are required to store plenty of information regarding transactions. Ethereum offers storage refunds when some of this is deleted, thereby decongesting the network. GasToken, for example, helps users tokenize stored gas.
Use applications that reduce costs
Several dApps now exist with the direct purpose of helping you reduce the cost of transactions on the Ethereum network. For example, Rook helps bundle transactions together, thereby reducing fees. Similarly, using Balancer’s crypto vault can significantly reduce gas fees. Other dApps that offer discounts or subsidies can also be found in the crypto space.
Learn to predict network congestion
While not ideal, it may prove necessary to strategize and carefully choose the moment when you wish for your transaction to be processed. Network congestion is brought about by the extreme use of the blockchain. To avoid this, you should stay aware of the latest news and development that can dramatically drive up demand for Ethereum.
Bundle transactions when possible
Gas fees vary based on types of transactions, and, of course, you’ll pay gas fees for each subsequent transaction. This is why, when possible, it is ideal to group your ETH coins into one address. For example, this can be done when you wish to move ETH from a number of your crypto wallets into the same dApp.
Consider a Layer-1 alternative
Ethereum’s position in the crypto ecosystem is unlikely to change for a while yet. Still, new blockchain networks have appeared in recent years which offer much lower transaction fees and are able to process more transactions at higher speeds. The Solana network, for example, charges around $0.00025 per transaction. Cardano, NEAR Protocol, or Binance Smart Chain are other alternatives to consider.
Why are Ethereum gas prices so high?
Ethereum gas prices tend to increase because of two factors: growth of the value of Ethereum cryptocurrency and an increase in demand for the Ethereum blockchain network. Simply put, gas fees are high because numerous individuals wish to use the network.
When are ETH gas prices lowest?
Ethereum gas prices vary a lot, even from one hour to another. Statistically, it’s been shown that the lowest gas prices can be found around midday. Use EthereumPrice to see how these vary.
Will ETH gas prices go down?
It is likely that Sharding technology, together with Layer-2 solutions, will help to eventually drive down the price of gas fees on the Ethereum network.
How do you avoid high Ethereum gas fees?
There are a number of strategies that can be used to pay lower Ethereum gas fees. These include: using Layer-2 solutions, utilizing gas tokens, or choosing the appropriate moment for the transaction.