What is gas?
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Written by Support Lead
Updated over a week ago

Gas refers to the fee required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform.

The cost of a transaction is determined by two components, the gas price and the gas limit. This is similar to filling your car with petrol, the limit is how much you put in the tank and the price is how much you pay per litre. Your gas limit needs to be sufficient to cover the operation that you are executing. For a simple transfer this is currently 21,000 units of gas. For an ERC-20 transfer it can be anywhere from 35 - 65,000 or more based on the underlying contract. More complex interactions, for example minting NFTs can cost several hundred thousand gas. We estimate the amount of gas required when sending a transaction so you shouldn't need to do this.

The gas price is how much you pay per unit of gas. It is also made up of two components, the baseFee, which is algorithmically determined by the protocol itself and burnt by the system and the priorityFee or tip, which is paid to the miner of a block. (Prior to the London fork in August 2021 fees were entirely priorityFee / tip based and paid to the miner.) The baseFee goes up and down based on how full a block is. If there are many transactions queued and no space in a block then the baseFee will increase by 12.5% per block (i.e. it can double in as little as 2 minutes), if a block is empty then the baseFee will decrease by 12.5% per block (i.e. it can halve in as little as 2 minutes). The priorityFee can be as little as 1-2 Gwei, but will increase significantly under periods of high demand (while the baseFee increases to compensate for the lack of capacity).

Bitpanda Custody currently provides 3 gas price options plus the capability for you to set your own custom price. If you use our SLOW / MEDIUM / FAST options then you will pay the baseFee plus 5% / 20% / 50% respectively. If you set your own custom price then your transaction should be accepted as soon as there is a block with capacity where the baseFee is less than your custom price. Any difference between your custom price and the baseFee will be spent on the priorityFee / tip.

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