What is Gas Limit in Ethereum?

Since launch, Ethereum has continued to be a one-stop platform for dApp developers. One might wonder why. 

Like all public networks, Ethereum is open-source and anchored on decentralization. However, it was the first to activate smart contracting capability, improving on Bitcoin. 

To understand how Ethereum works, it is paramount that some key terms must be clearly defined. One such term is the “Gas” Limit. 

But before we dig in on what it entails, we must first go down to where it all began; the concept of “Gas”.

What’s “Gas” in Ethereum?

To easily comprehend what “Gas” is in Ethereum (and other smart contracting networks), let’s use the analogy of a debit card. When a debit card is swiped, a cost is incurred. This cost is the processing fee charged by the bank. 

In Ethereum, transactions are executed via smart contracts. Whenever these transactions are processed, a fee must be paid. This fee is known as the “Gas”. Without it, transactions will fail. Therefore, “Gas” is what you pay to enable the successful completion of the transaction. 

In technical terms, “Gas” is paid to Ethereum miners as compensation for their computational effort. Miners are responsible for validating and processing transactions.

The Ethereum Blockchain platform charges fractional Ether tokens for utility as “Gas”. These micro-units of “Gas” are referred to as nanoeth or Gwei. In turn, Gwei allocates resources over the Ethereum Virtual Machine (EVM), thereby contributing a vital part that ensures a smooth operation of smart contracts and decentralized applications. 

Ethereum “Gas” encapsulates the “Gas” price and the “Gas” limit. This means that every cost of transaction is a product of the “Gas” price (nanoeth or Gwei) and “Gas” limit.

Now that “Gas” has been explained, it is essential to know what the “Gas” limit suggests.

What is the “Gas” Limit?

“Gas” limit is refers to the maximum Gas price a willing person or entity has to pay to transact on Ethereum. Typically, DeFi or NFT transactions will require the sender to pay more while simple transfer transactions are cheaper and require less Gas. This maximum price is calculated in “Gas” units, and the “Gas” limit refers to the maximum value charged for the transaction.

Alternatively, the “Gas” limit can be seen as a protective measure for stabilizing fees and preventing them from spiraling out of control in case of a bug or an error.

The “Gas” limit is often automatic in most cases but can also be adjusted by the person making the transaction. Adjustments are usually made by resetting slippages to meet their needs. 

Generally, faster transactions usually charge higher “Gas” fees and vice versa. But in the case of a very low “Gas” limit, the transaction will take a longer period and could fail despite the network charging fees.

Bottom Line

There are also other blockchains that charge “Gas” fees per transaction too. Complaints about the high “Gas” fees of Ethereum have led to the development of cheaper networks such as Solana and the BNB Chain that charge relatively low Gas for transaction processing. These networks are scalable to overcome high “Gas” fees, outperforming Ethereum by several folds.