Mahima Thacker
@mahimathacker
Ever wondered how gas fees are calculated in Ethereum transactions? Let's simplify it with a real example and some formulas! In this post, I'll be explaining the concept with the help of a random transaction on the Ethereum network. In Ethereum, gas fees are determined by:
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Mahima Thacker
@mahimathacker
Gas Limit & Usage by Txn: Gas Limit is the maximum amount of gas a user is willing to spend on a transaction, while Gas Usage by TXN is the actual amount of gas used to execute the transaction.
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Mahima Thacker
@mahimathacker
The number 21,000 is the standard Gas Limit for a simple Ethereum transaction, such as transferring ETH. This number can change for more complex transactions, like interacting with smart contracts, as they require more computational work.
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Mahima Thacker
@mahimathacker
Gas Price: The amount of Ether the sender is willing to pay per unit of gas.
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Mahima Thacker
@mahimathacker
The formula to Compute the Transaction Fee is 👇 - Gas Limit and Gas Usage by Txn * Gas price Gwei/ 1 billion = Ethers Units - Gas Limit and Gas Usage by Txn * Gas price Gwei / 1 billion * price of ether = Gas fees in dollars
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Mahima Thacker
@mahimathacker
For our example transaction: Gas Limit and Gas Usage by Txn = 21,000 Gas Price = 35.061407301 Gwei Hence, - (21,000 * 35.061407301)/1 billion = 0.00073628955(Transaction Fee in Ethers) - ((21,000 * 35.061407301) /1 billion) * 3,492.21(Current ETH Price) = 2.571277741(Transaction Fee in Dollar)
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