Good morning.
I’m Mitsui, a web3 researcher.
Every Saturday and Sunday at noon, we’ll deliver articles explaining basic vocabulary. We aim to keep each article concise enough for a quick read, while also making them suitable for revisiting and studying.
Today’s topic is “gas fees.”
Please watch until the very end!
Users often complain that gas fees are too high. However, this perspective misses the point entirely. Gas fees are not merely a charge; they are the price of a carefully designed order that prevents the destruction of a shared, finite infrastructure.
Why “Free” Doesn’t Last
The history of the internet is littered with examples of free services collapsing. Email spam proliferated because sending it was free. DDoS attacks against websites became possible because the cost of consuming bandwidth was effectively zero per byte.
If it’s free, malicious actors can consume resources without hesitation. Spam bots send millions of messages per day. Attackers send thousands of requests per second. As a result, legitimate users’ messages get buried, and legitimate requests go unprocessed.
This is a classic problem in economics. Resources inevitably become contested. Shared resources available to everyone will be depleted if each individual consumes excessively. This is called the “tragedy of the commons.”
Blockchain is no exception. If free transactions are allowed, the network will be flooded with spam in no time.
The true resources provided by blockchain
What’s crucial is that blockchain provides not merely the transfer of tokens, but an extremely finite resource.
Blockchain has limited space within blocks generated periodically (e.g., every 12 seconds). In the case of Ethereum, the amount of data that can be included in each block is restricted. This means the number of transactions that can be included in each block is finite.
Furthermore, validators consume computational power to process this data. When modifying the state—updating account balances or executing smart contracts—nodes perform computations and consume storage. All of this is supported by finite physical resources.
What circulates in Web3 is not digital assets called “tokens,” but a tangible resource called “blockspace.”
What exactly are we paying for with our gas fees?
To understand the essence of gas fees, users need to look closely at exactly what they are paying for.
First, there’s computational cost. Executing a smart contract requires nodes to perform calculations. The more complex the calculation, the more computational power it consumes. Users pay gas fees for this consumed computational power.
Next is the state change cost. When updating account balances or modifying smart contract storage, nodes must persist this information to disk. Storage is finite, and its use requires compensation.
And then there’s the load on the entire network. Each transaction must propagate through the network. This propagation also consumes bandwidth as a resource.
Gas fees are paid for all this resource consumption. In other words, users are not paying merely to “execute a transaction,” but rather for “consuming real resources.”
Why the auction system?
So why doesn’t Ethereum set gas fees at a fixed rate, but instead determines them through an auction system?
The answer lies in how priorities are determined. Block space is limited, and not all transactions can be processed simultaneously. So which transactions should be prioritized?
The most rational solution is to let price determine priority. Those who want faster processing pay more, and in return, miners and validators prioritize their transactions. This mechanism ensures that transactions maximizing value are processed first.
It strikes a balance between fairness and efficiency. The wealthy do not monopolize unlimited priority, nor is there complete egalitarianism. Market mechanisms achieve optimal allocation.
What happens if there’s no gas fees?
If gas fees were zero, what would happen?
Instantly, the network becomes flooded with spam transactions. Attackers send millions of meaningless transactions. Legitimate users’ transactions get buried and may take days to be processed.
Miners and validators cannot distinguish between junk transactions and legitimate ones. Consequently, spam is processed relentlessly. As a result, the network’s bandwidth and computational power are rapidly depleted, eventually causing the network to halt.
In this situation, legitimate users are excluded. Blockchain was originally supposed to have the advantage of being “accessible to anyone.” However, spam could cause this feature to be lost.
How did gas prices change in L2?
In recent years, Layer 2 solutions (such as Optimism and Arbitrum) have significantly reduced gas fees. Why have they been able to reduce them, and why can’t they be reduced to zero?
L2 can reduce costs because it can batch multiple transactions and compress them into a single L1 transaction.
In other words, a single L1 block space can process hundreds of L2 transactions. This efficiency dramatically reduces the cost per transaction.
However, it does not become zero. The reason is simple: it ultimately depends on L1. L2 transactions must also be periodically recorded on the L1 blockchain. This cost of recording on L1 does not disappear entirely.
Furthermore, state changes also occur within L2, consuming the computational power and storage capacity of L2 nodes. In other words, while scaling reduces costs, the fundamental problem of finiteness remains.
Who is the gas fees protecting?
Gas fees, like slashing, protect multiple stakeholders.
First, we protect the network itself. Without costs, spam and malicious load would cause the network to become dysfunctional. The existence of gas fees ensures the network’s stability.
Next, we protect validators. They invest massive amounts of storage and computational power to operate the network. Without gas fees, they would receive no rewards, and their economic incentive would be lost.
And it protects legitimate users. If spam proliferates, legitimate transactions won’t be processed. Gas fees deter spam, increasing the likelihood that legitimate users’ transactions will be processed reliably.
In other words, by paying gas fees, users are actually purchasing order.
Is “high gas fees = bad”?
Often, when gas fees surge, comments like “Ethereum has failed” appear. However, this judgment is inaccurate.
High gas fees are actually an indicator of strong demand. Because many users want to use the network, competition for priority intensifies, resulting in higher costs. This is proof that the network holds value.
The issue lies not in the price itself, but in the design. Certainly, costs that are too high for the average user can hinder access. However, this is not without solutions and can be addressed through more efficient scaling solutions (such as L2).
The surge in gas prices serves as a key indicator that network demand is exceeding supply.
Public infrastructure made possible by gas fees
Ultimately, the existence of gas fees is essential to realizing the “public infrastructure” that Web3 aims to achieve.
Traditional public infrastructure (roads, bridges, airports, etc.) is maintained through taxes and fees. Web3 has no government to levy taxes. However, a mechanism exists where infrastructure is automatically maintained through a “price mechanism” known as gas fees.
Users pay gas fees → Validators earn rewards → Validators keep nodes running → The network remains stable. This cycle is fully decentralized and not controlled by anyone.
Furthermore, usage rights are automatically adjusted based on price. As demand increases, costs rise, prompting users with limited resources to reduce their usage. As a result, network load automatically converges to an optimal level.
In a world where no one trusts anyone, we are building an order independent of the state. Gas fees are the core of this grand experiment—an extremely practical and rational mechanism.
That concludes our explanation of “gas fee”!
Disclaimer：I carefully examine and write the information that I research, but since it is personally operated and there are many parts with English sources, there may be some paraphrasing or incorrect information. Please understand. Also, there may be introductions of Dapps, NFTs, and tokens in the articles, but there is absolutely no solicitation purpose. Please purchase and use them at your own risk.
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🇯🇵🇺🇸🇰🇷🇨🇳🇪🇸 The English version of the web3 newsletter, which is available in 5 languages. Based on the concept of ``Learn more about web3 in 5 minutes a day,'' we deliver research articles five times a week, including explanations of popular web3 trends, project explanations, and introductions to the latest news.
Author
mitsui
A web3 researcher. Operating the newsletter "web3 Research" delivered in five languages around the world.
Contact
The author is a web3 researcher based in Japan. If you have a project that is interested in expanding to Japan, please contact the following:
Telegram：@mitsui0x
*Please note that this newsletter translates articles that are originally in Japanese. There may be translation mistakes such as mistranslations or paraphrasing, so please understand in advance.