Understanding Gas Fees: 5 Key Questions Answered

“Gas fee” is the term used for the cost that blockchain users pay to network validators each time they wish to perform a function on the blockchain. Gas serves as an incentive for network validators to record transactions accurately and transparently. Some blockchain players use the term “gas fees,” while others call them “transaction fees.” The reference to “gas” comes from the fee’s similarity to the fuel required to keep a vehicle running. 

Gas fees often surprise new blockchain users, and depending on the type of network used, they can be wildly unpredictable from one minute to the next. With Kyoto, gas fees remain competitively low, and users can passively contribute to making the world a better place as part of every transaction they make.

Gas Fees

How do gas fees work?

When you carry out a transaction on a blockchain network, you must pay a gas fee in the blockchain’s native token. This fee is calculated based on the complexity of the transaction and the network's congestion level. The more people using the network, the higher the gas fees. These fees are paid in the blockchain’s native token, some high-profile examples being Ethereum (ETH), Polygon (MATIC), Binance Smart Chain (BSC), and, in due course, the Kyoto blockchain.

What is a gas unit, otherwise known as gwei?

The gas fee payment is facilitated in a unit called gwei, a small fraction of the native currency. The reason for using gwei is that it's much easier for humans to read whole numbers than to count the number of zeros after a decimal point.

What is the purpose of gas fees?

Optimum security and functionality are paramount when it comes to blockchain. With that in mind, gas fees serve two core purposes:

  1. They prevent spam and malicious activities on the network by attaching a cost to each transaction.
  2. They act as an incentive for validators who keep the network running smoothly.

Why are some gas fees so high?

Our highway analogy from earlier in the article is a good explanation. Usually, highways are fast-moving, but when heavy traffic occurs, they become congested, and passage slows, incurring additional costs for participants as they are stuck. Higher costs also happen when you want to drive faster on the highway due to increased gas consumption. Blockchain behaves in much the same way, the result being an – at times - dramatic increase in gas fees when the network is busy. For example, Ethereum gas fees can range from $0.40 to $1 per transaction. Ethereum operates on an auction-based system, where users can outbid each other to process their transactions faster. But there is a way around paying expensive gas fees…

How can I minimize gas fees?

Bridging your assets to other faster and less congested Layer 2 networks, such as Polygon, Optimism, and Arbitrum, you can reduce your gas fees sometimes by up to 100x. The introduction of Layer 2 solutions that can process transactions more quickly and cheaply has addressed the high fee issue to a degree, but efficient Layer 1 solutions are still being developed as a more sustainable permanent solution to this problem. One such solution is the Kyoto Blockchain. With a fast transaction speed and a gas price of 50 gwei per transaction on our Testnet (equal to $0.00035 based on the launch price of Kyoto at 0.33$), we aim to ensure that your focus remains firmly on development and growth rather than exorbitant gas prices. For comparison, at the time of writing this article, a transfer TXN on ETH charged us 0.65$ in gas fees. This makes Kyoto 1800x cheaper than ETH when considering the USD value of transactional gas fees.

How Kyoto harnesses low gas fees for positive impact

Kyoto offers lightning-fast transaction speeds and low gas fees with our gas fee handler contracts designed to drive sustainability and positive impact initiatives. 25% of the gas fees collected in every transaction on our blockchain go directly to reforestation projects and other eco-friendly activities. 

For example, let’s look at the potential impact of utilizing 25% of the average fees collected from the top 15 ETH contracts during 24 hours: 

If we take $2,000,000.00 as an average figure for fees collected daily and then contribute 25% of these funds towards reforestation, Kyoto could plant around 5,000,000 trees and provide 240 local jobs.

If you calculate this figure over a 365-day period, Kyoto could plant up to 1.8 billion trees, creating fresh economic opportunities for those in need and offsetting more than 43 million tons of CO2 per year. This is a testament to the transformative power of Kyoto’s model and how gas fees can be used as a force for good.

For more information on the Kyoto Blockchain, explore our Greenpaper. Get the latest updates on our news page and subscribe to our monthly newsletter.

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