Gas Fees in Crypto Transactions and How Vone Eliminates Them
The cryptocurrency world based on the blockchain industry is evolving at a fast pace, reshaping and refining the finance industry. The cryptocurrency market size is predicted to reach $1087.7 million by 2026.
It’s essential to have a clear idea of the term “gas fees in crypto”, as it may be often misunderstood. A gas fee is a fee that users pay to conduct transactions on the blockchain network. The term “gas” is used, as this fee is very similar to the fuel that vehicles utilize to run.
This article aims to provide a detailed explanation of gas fees, shed light on how gas fee works on the blockchain, and discuss whether “no gas fee” option is available for users.
What is gas fee in crypto?
Gas fees refer to the costs that blockchain users pay each time they initiate a transaction on the blockchain network. In other words, gas fees are considered payable incentives/fees to deal with the transaction recording process in an accurate manner.
Gas fees are paid to network validators. Network validators run a specialized computer program to authenticate all the blockchain transactions, ensuring the blockchain ledger’s security.
How are gas fees calculated and paid?
A gas fee is based on the crucial economic concept of demand and supply. In the context of blockchain technology, the overall computing power of the network validators is interpreted as supply, while demand is the total computing power necessary to validate the users’ transactions.
Usually, the update of the gas fee is done in real time depending on the network demand. In addition, a user has the opportunity to adjust this fee manually and select between two settlements: a) “faster-and-more-expensive’’ and “slower-and-less-expensive”.
Examples of gas fees on popular blockchains
You should explore different blockchain transaction fee structures to make informed decisions in the cryptocurrency ecosystem. Here are several samples of gas fees on popular blockchains:
Dogecoin (DOGE)
Dogecoin has introduced a new transaction fee structure recently. The main change was reducing the minimal relay fee to 0.001 DOGE. Previously it was 1 DOGE. Furthermore, Dogecoin decreased the dust limit to 0.01 DOGE, in this way, incentivizing the use of microtransactions.
Moreover, it defined a fee rate of 0.01 DOGE as a default block inclusion fee, incentivizing miners to validate transactions on the soonest available block.
Ethereum (ETH)
The key element of Ethereum’s transaction is the term ‘’gas’’, utilized for the allocation of resources used for data storage, token transfers, and computations. Recently, Ethereum has started using a new fee structure, by implementing EIP-1559.
According to the new model, to know the overall transaction fee, it’s necessary to multiply the gas unit by the sum of both the base fee and tip (or the priority fee).
“What is the base fee?” It’s the minimum price per unit of gas for including in a block. This is calculated taking into account the demand for block space. Miners are rewarded with a tip and mostly, it’s set automatically by many wallets. So, the base fee is removed from the circulation.
The calculation of the overall transaction fees is done in the following way:
- Ethereum’s total transaction fee is – gas units (limit) * (base fee plus tip).
The gas fees of Ethereum are typically high, which is associated with the network’s increasing popularity. Generally, the complexity of decentralized apps leads to the consumption of more gas, taking up more space in the blocks.
Bitcoin (BTC)
The Bitcoin transaction fees can be calculated taking into account the size of the transaction in bytes (and not the transaction itself).
In general, the transaction fee is measured in satoshis per byte. In this case, a satoshi is interpreted as the smallest unit of Bitcoin (0.00000001 BTC).
Network validators or miners consider a higher fee-to-size ratio to be a priority. That’s to say, it’s more likely that a transaction with a higher fee-to-size ratio will be included in the blockchain.
To know the transaction fee, you should be aware of the transaction size, as well as the fee rate. For example, if the size of your transaction is 17,000 bytes and the required fee rate is 10 sat/byte, your transaction fee will be 10 x 17,000 = 170,000 satoshis. The rate may be different connected with the network congestion. This means that the higher demand for a transaction results in a higher fee.
Key challenges
Though blockchain gas fee plays an important role in incentivizing miners to validate blockchain transactions, it may also cause key challenges for users.
- The gas fee may be unpredictable depending on the supply and demand dynamics. If the blockchain network has high traffic, this may lead to a huge increase in gas fees, causing frustration among users.
- Gas fees may be high especially in case of small transactions, discouraging users from initiating smaller transactions on the blockchain network.
- High gas fees often result in the exclusion of many potential users. These fees are especially confusing for beginners and users with low-income levels. Thus, they are less likely to engage in blockchain activities.
Benefits of zero gas fee
Vone is the first Web3 communication platform, offering a transformative and game-changing solution to address various challenges associated with paying gas fees on the blockchain. It’s a revolutionary ‘’pay no gas fee’’ approach, allowing users to eliminate the burden of paying high gas fees.
The main benefits include:
Affordability
With Vone, you no longer have to pay gas fees to initiate transactions within the platform’s ecosystem. Zero gas is achieved due to the transactions happening on the platforms’ backend by updating users’ account balances. This makes blockchain activities more affordable and quicker.
Accessibility
Unpredictable gas fees may create serious obstacles for users, blocking their entry into the diverse blockchain world. With Vone, you have to pay no gas fee to start your cryptocurrency journey.
Key takeaways
- Gas fees refer to fees that users pay to initiate transactions on the blockchain network.
- A gas fee is based on the economic concept of demand and supply. In the context of blockchain technology, the overall computing power of the network validators is the supply, whereas the demand is the total computing power required to confirm the users’ transactions.
- Different blockchain platforms have different policies when it comes to gas fees.
- Among the major challenges of gas fees are: the unpredictability of gas fees, depending on the demand the blockchain may experience, exclusion of many potential users, especially those who want to make small transactions.
- Vone, the first Web3 communication platform, offers a transformative and game-changing solution that eliminates gas fees for users, making their digital experience seamless, affordable, and accessible.