What is Gas? Pt II (ETH Fail City)
You may be hearing quite a bit online about Layer 1 being unusable and individuals losing $200 in failed transactions. For a quick review, check out “What is Gas?” Part I, where we spoke of native tokens on respective chains being the driving force behind transactions. We left off before going into further detail of what drives the price of gas, and what ultimately causes a transaction to fail. Today we will explore these topics.
The tweet above describes the issue that the user is facing attempting to swap ~$3000 in USDT to USDC. Quoted are transaction prices in the $300–$400 range if using the Ethereum Blockchain with the native token of Ether as the gas. For reference, this is approximately 0.1 ETH per transaction.
This crippling statistic is a result of the Ethereum network handling on average a miniscule 15 transactions per second. (For reference, Bitcoin can handle 5 per second and most major credit card systems can handle 3000 per second)
Ultimately, the demand for the computing power in the Ethereum network is not being matched by resources or network capabilities.
The cost for these resources is set by a number of factors including the time of day, the financial markets, the number of miners currently online, and the number of decentralized applications (DApps) in use at the time.
The resources and miners are able to stay online as result of capturing the blockchain network fees generated by the transactions.
Similar to how Gasoline for our cars is measured in dollars but could also be referred to in pennies, Ether carries a similar pricing where each unit of gas price is known as a GWEI.
Gwei is short for gigawei, or 1,000,000,000 wei. Wei, as the smallest (base) unit of Ether.
Perhaps an oversimplification is the difference between 87 and 93 octane at the pump. One gallon of 93 Octane will get you significant more “bang for your buck” when you fill up your custom Doge-branded Stock-Car.
Shown below are the latest gas prices from www.gasnow.org, a website that tracks current network activity, congestion and gas prices. Similar to the doge-stock car concept, if you apply a higher gas price to your transactions, you will have a higher success rate and a better chance of it making it through the network and confirmed.
This pricing for transactions has quickly gotten out control, as the tweet in the beginning of the article has shown. There is very little reassurance that you will not have your transaction fail.
There is no protection or refunds from these failed transactions, and many users find themselves out of hundreds of dollars for not selecting an ample gas price and total amount of gas.
This year will be important for the future of ETH Blockchain. The use of this technology is largely dependent on fast and cheap transactions.
Although the Binance Smart Chain network shares similar congestion issues during high-traffic times, the transaction fees are still under the ~$1 range, and in most cases only a few pennies.
I doubt this will be the last we speak of Gas, so in the meantime check these websites for additional information about gas pricing on the related blockchains:
Appendix:
Average Gas Prices for ETH GWEI by Day of Week & Time
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