Cover Image Source - modified
Every transaction on Ethereum blockchain involves a gas fee. It is the fee which is paid to the miners for validating a transaction. The price of gas keeps on fluctuating due to the market dynamics. It is really hard to predict the gas fee. Sometimes, the gas fee is as low as 1-5 gwei, and sometimes it is as high as 80-100 gwei. Gwei equals 0.000000001 ETH. Gas is the fuel of the Ethereum blockchain. The fee has to be paid but a fuel is fuel. A fuel can’t be a currency. A fuel can be bought by the currency. In the Ethereum blockchain, the currency is ETH. The price of the fuel consumption is needed to be paid by ETH. Crypto Black Thursday Crash was really scary incident for Ethereum network. Gas price skyrocketed abnormally due to bottleneck and it was 200+ gwei. Many users paid astonishingly high gas fee to interact with dapps and make transfers.
Understanding the arbitrary fee of Ethereum!
The Ethereum blockchain is flexible. Here, every sender submits a gas bid. A gas bid includes a gas limit and a gas price. The gas limit is the maximum amount of gas you are willing to pay as the mining fee. The miners pick up the transactions as per the bids and include in the next block. In the case of Bitcoin, more fee paid in Bitcoin leads to faster transfer but Ethereum doesn’t work like that. Ethereum has a limit on the maximum amount of gas spent per block. If the sender’s gas limit exceeds the current gas limit of the block, the miner needs to refund the additional gas. So, the miners pick up transactions looking at gas price mainly. For a miner, it is economic to pick up a transaction with a normal gas limit and higher gas fee. If you pay more gas fee, your transaction will be executed faster. If you pay abnormally low gas fee, the transaction may not get mined also. So, hope you get the valid reason for arbitrary gas fees during the time when the transaction demands are high.
Calculation from Eth Gas Station
GasToken – Tokenizing gas!
Ethereum blockchain has been designed like this. Often it is possible that the users are paying more fees than the actual requirement. Is there a way to save gas fees? GasToken was built to solve the problem. GasToken is an Ethereum contract which tokenizes gas. It is designed to store gas when the price is cheap and it deploys gas when the price is high. If you use GasToken for Ethereum transaction, you can save the gas fee. Transaction can be anything starting from interaction with smart contract, trading in a DEX or just simple wallet to wallet transfer. GasToken was born in 2017 but it didn’t attain mass adoption.
GasToken has ERC20 token standard. It uses the ‘storage refund’ mechanism of Ethereum. When a storage element is deleted in Ethereum, it provides a refund. You can create or mine GasToken by storing data into the GasToken contract's storage during low gas price. During high gas price, you can free GasToken by sending them to the contract address for destruction. It becomes a ‘free up’ act and Ethereum provides a refund of gas. This refund gas is not convertible to Ether. If you want to utilize the gas, you need to spend it during the same transaction or you can bundle the transaction with another that will utilize the gas. The mechanism is comparable to storing your goods at a low price and selling during high price. There are two versions of GasToken – GST1 and GST2. GST2 seems to be more efficient.
Image Source – GST1 vs. GST2
But how much do you save? Yes, the savings is considerably good. Here is a sample calculation from the makers:
GasToken has a proper use case. It can help us to create decentralized and ideal blockchain resource pricing. Most probably, the technology needs more focus from the developers. GasToken isn’t perfect but it can improve the present arbitrary price discovery of gas. Paraswap, a new DEX aggregator, is using GasToken nowadays to provide more economic swap option to the users. 1inch.exchange, again a big DEX aggregator, has started to use a token called Chi very recently. They have built Chi token on the GasToken concept only. Chi token helps the users to save gas fee on swaps. A novel concept like GasToken didn’t find proper application earlier. Integration of such a concept into a DEX or DEX aggregators can provide great business proposition and draw more users. Ultimately people want cheap resources.
Note: You can explore GasToken by plugging their abi into any Ethereum contract interface. If you don’t have proper technical understanding, don’t try to use the contract as it is not audited as per the developers. You can follow the author on twitter.