Why are the commissions in Ethereum are so expensive and how to reduce them

“Gas” in Ethereum is a term denoting the volume of computational resources necessary for the operation. Transfer of token or release of a new asset, deployment or interaction with a smart contract-all these operations need a virtual machine resources for execution. Their volume is calculated in “Gaza”.

The price of gas is indicated in Gwei, which is the designation of a small part of the Ethereum coin equal to 0.00000001 ETH.

The number of computing resources for the transaction is not static and depends on the loading of the Ethereum blockchain, as well as the complexity of the selected operation.

From here follows a phenomenon as a limit of gas. This is the number of computing resources required for the transaction, whether it is the exchange of assets in Defi Protokol or the translation of the USDT ERC-20 between addresses. The gas limit can be represented as the number of gasoline liters required to pass the path from point A to point B.

The cost of the transaction is calculated by multiplying the necessary gas limit by its cost in gwei. If your transaction requires 21,000 gas units, and the cost of a gas unit in the market was 14 Gwei, then the transaction commission will be 0.000294 ETH.

According to the data on October 19, 2022, to transfer USDT stablcoins to Ethereum from the address to the address, you will need to pay gas in the amount of $ 0.91, and the costs of more complex operation, for example, for the exchange of assets on the Uniswap decentralized exchange, will amount to about $ 3.11 in Gwei.

After the London hardforte on the Ethereum network, which took place in August 2021, the structure of the commissions changed. She turned on the ETH burning mechanism and the limit size of the blocks, which changes depending on the loading of the blockchain. A detailed scheme of calculation of the commission is published on the Ethereum Foundation website.

Ethereum remains the most used blockchain protocol, hundreds of the most popular applications work on it. At the same time, Ethereum performance has not changed much since the launch in 2015 and is much inferior to more modern projects, such as Polkadot, Solana or Algorand. That is why the commissions in Ethereum are stably high. At the same time, operations in smart contracts require increased costs.

How did the commission on Ethereum change after The Merge?

From the moment Ethereum transition to the consensus algorithm Proof-OF-STAKE, the mechanisms for determining the commissions for transactions on the network have not changed. The only indirect impact on the cost of operations in Ethereum can have less time between blocks. Before the activation of The Merge, the blocks were created with an interval of 14-15 seconds, after the merger, time decreased to 12 seconds. Ethereum blockchain has become about 20%faster, which is capable, although not significantly, to reduce the load on the network.

The first update after The Merge, aimed at reducing commissions by changing the mechanisms of calculation at the basic level of the blockchain, is expected in the second half of 2023 as part of the Shanghai hardcore.

Further upgrades involve the implementation of the cartoon and the expansion of the use of “rolls”. According to Vitalik Buterin, this can increase the network throughput to 100,000 per second, while reducing the size of the transaction commissions on the Ethereum network.

Second -level solutions

Despite the fact that the commissions in Ethereum are still high, and they plan to solve the problem soon, there are fewer ways to pay for transfers now. For Ethereum, there are a large number of second -level protocols designed to solve the problem of high commissions.

The second -level solution for Ethereum operates on the basis of Rollups technology (Rollups), transactions in them take place outside the main network https://gagarin.news/ua/news/hyosung-at-ms-will-support-bitcoin-in-the-u-s/ Ethereum. They are combined into large groups and only then confirmed at the “basic” level, that is, in the Ethereum blockchain.
Among the popular L2 projects are Arbitrum, Optim, Loopring, Zksync, Boba Network and Aztec Network.

Commission for transfers and swaps of tokens in Ethereum and L2 projects on October 20, 2022. Data: l2 feats

Sadchans in Ethereum use an independent security system and consensus algorithms, being essentially independent of Ethereum networks. Like second -level solutions, sidechens set the task of increasing the speed of transactions and reducing their cost for crypto acts of the “parental” network. The most popular Sidchans in Ethereum: Matic (Polygon Pos), Gnosis Chain or Loom Network.