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Gas and Priority Fees

To prevent spam and reward node operators, Ethereum uses a mechanism called "gas", which is a cost that is charged to execute a transaction. Gas costs are associated with all transactions that require computation or update state (e.g. transferring tokens from one account to another). Gas costs are not applied to requests that only involve reading state (e.g. querying the balance of an account). The amount of gas required to pay for a transaction is calculated based on the actual computational actions that are required to execute that transaction. For instance, a simple transaction to transfer ETH from one account to another will require less gas than invoking a complicated smart contract function that involves lots of computation and storage. The cost of gas varies based on network usage. Gas costs more during period of high network activity. The cost per unit of gas is known as the "base fee".

In addition to the calculated gas cost, an Ethereum transaction can specify an optional priority fee, which is an additional fee that is paid directly to the operator of the node that executes the transaction. Priority fees are intended to incentive node operators to execute transactions. A priority fee is specified as a value in addition to the base fee, which means that the total cost of the priority fee is always a factor of the amount of gas required to execute a transaction.

With the above in mind, the total cost of fees associated with a transaction are calculated as: units of gas used (base fee + priority fee).

Estimating Gas​

The Ethereum JSON-RPC specifies the eth_estimateGas method, which accepts a transaction and returns an estimate of the amount of gas required to execute that transaction. The transaction will not be executed and added to the blockchain. The estimate may be different (typically more) than the amount of gas actually used by the transaction for a variety of reasons, including EVM mechanics, node performance, and changes to the state of a smart contract. To invoke the eth_estimateGas RPC method, use the Web3Eth.estimateGas method and provide the Transaction for which to estimate gas.

Web3.js transactions may specifying a gas limit (the maximum amount of gas they are able to consume) by providing the Transaction.gas property. If the specified gas limit is less than the actual amount of gas required to execute the transaction, the transaction will consume an amount of gas equal to the gas limit, which is not refunded, before failing and reverting any state changes made by the transaction.

const transaction: Transaction = {
	from: '<SENDER ADDRESS>',
	to: '<RECEIVER ADDRESS>',
	value: web3.utils.ethUnitMap.ether,
};

const gas: bigint = await web3.eth.estimateGas(transaction);
transaction.gas = gas;

Calculating Fees​

Web3.js exposes a helper, the Web3Eth.calculateFeeData method, that can be used to intelligently calculate the value of the base and priority fees to specify for a transaction. Web3Eth.calculateFeeData accepts two optional parameters: baseFeePerGasFactor (default value: 2) and alternativeMaxPriorityFeePerGas (default value: 1 gwei). Both optional parameters are used in calculating the maxFeePerGas, which is described below. The return type of Web3Eth.calculateFeeData implements the FeeData interface, which specifies four values:

  • baseFeePerGas: base fee from the last block
  • gasPrice: result of the eth_gasPrice RPC method (legacy purposes only)
  • maxPriorityFeePerGas: result of the eth_maxPriorityFeePerGas RPC method
  • maxFeePerGas: calculated as baseFeePerGas * baseFeePerGasFactor + (maxPriorityFeePerGas ?? alternativeMaxPriorityFeePerGas)

Web3.js transactions may specify maxFeePerGas and maxPriorityFeePerGas values. If both values are specified, maxFeePerGas must be greater than or equal to maxPriorityFeePerGas. If maxFeePerGas is less than the current base fee, the transaction will not execute until the base fee drops to a value that is less than or equal to the maxFeePerGas.

const transaction: Transaction = {
	from: '<SENDER ADDRESS>',
	to: '<RECEIVER ADDRESS>',
	value: web3.utils.ethUnitMap.ether,
};

const feeData: FeeData = await web3.eth.calculateFeeData();
transaction.maxFeePerGas = feeData.maxFeePerGas;
transaction.maxPriorityFeePerGas = feeData.maxPriorityFeePerGas;