What is a Gas Fee?
Any transaction on Ethereum requires computational effort to perform. For example, minting or transferring NFTs calls for the work of creating tokens for the asset (tokenization) and approving the transactions. Such work requires resources. Gas is the unit for measuring the amount of such effort. Therefore, gas fees are the payments for computing energy for processing and validating transactions on the blockchain. Transactions requiring more work to execute attracts higher gas fees.
This name ‘gas fee’ is not accidental since it parallels the concept of real-life cars’ gasoline consumption. Running a car for a specific distance, say X miles, requires a specific amount of fuel, for instance, Y gallons. In this case, X is the utility value, and Y is the cost for the car trip. Similarly, a transaction or a contract on Ethereum can be 100 ETH (X), and the gas price for processing the transaction can be 0.000002 ETH (Y).
All the activities on the Ethereum blockchain (Ethereum virtual machine, EVM) attracts a gas cost. For example, adding two numbers will cost 3 GAS, getting an account balance cost 400 GAS while sending a transaction of 21000 GAS. The GAS is multiplied by the gas price, measured in GWEI (equivalent to 0.000000001ETH), to know how much users have to pay for a particular activity.
NFT Gas Fee
Most marketplaces charge users gas fees for minting and trading NFTs. The amount of the fee varies with the number and type of computations for different transactions. Computations that are more complex require higher gas fees.
Ethereum requires users to determine a “gas limit”, which is the maximum gas there are willing to pay for a transaction. The gas limit is multiplied by the gas price to give the fee.
The gas price fluctuates depending on many factors, such as network traffic. The amount of gas limit also affects the transaction speed. The higher the gas fee, the faster the transaction. Minors prefer transactions with high gas prices since they have high returns.