What is Gwei and to use it

2023-03-09, 09:43

[//]:content-type-MARKDOWN-DONOT-DELETE
![](https://gimg2.gateimg.com/image/article/16783546261.18.jpeg)
## [TL; DR]
Gwei is a denomination of <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> used for paying transaction fees.

One billion Gwei makes 1 ETH, meaning that 1 Gwei equals 0.000000001 ETH.

The total <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network fee comprises gas units, base fee and tip.

The users who want to pay less network fee should set gas limits and make their transactions when fewer people are using the blockchain.

## Introduction
When people send cryptocurrencies to others, they incur a cost called gas or transaction fee. In most cases, this is a very small amount which people pay using a blockchain’s native token. The demand for a blockchain’s products and services is the main determinant of the transaction fee that users pay. In this article, we focus on ETH Gwei and other <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> denominations.

## What is a Gwei? 
Many cryptocurrency users want to know the Gwei meaning. Gwei is a smaller denomination of ETH, a native coin of the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain. We can liken it to a cent when we use the United States dollar since people use it to make payments for low cost products and services. The main function of ETH Gwei is to pay for the blockchain’s transaction fee.

A Gwei, also called one NanoEther, Shannon or Nano, is one billionth of ETH, meaning that we can write it as 0.000000001 ETH. Put differently, 1 ETH equals one billion Gwei. According to <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a>, there are other <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> denominations which include Wei, Kwei, Mwei, Gwei, Microether and Milliether. Let's present the details in the following table to make it easier to grasp.

![](https://gimg2.gateimg.com/image/article/167835472611131678354689_.pic.jpg)

## What is Gwei Gas?
As mentioned, we mostly use Gwei when we refer to gas fees. So what is Gwei gas? Gwei gas, sometimes called <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> gas, is a fee which users pay when making transactions on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain. A fraction of the gas fee is paid to the validators who stake their ETH and validate transactions on the network while a smaller proportion is burned to create deflationary pressure on the coin.

However, many <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> users complain about the high transaction cost on the blockchain. That is one reason for the developers to undertake the Shanghai update and other upgrades to rationalize and lower the gas fee.

Currently, the gas fee comprises three elements namely gas units, base fee and tip. In fact, <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> uses the following formula for establishing the Gwei gas.

Total Fee = Gas unit (limits) * (Base fee + Tip)

Gas units: This is the gas fee that a user is willing to pay for a transaction. What this means is that you can adjust the charge you are willing to pay depending on the type of transaction. The reason is that the various transactions that people make on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain have different gas fees. For example, [sending ETH to someone is cheaper](https://www.gate.io/blog_detail/1355/how-to-transfer-crypto-anonymously "sending ETH to someone is cheaper") than using complicated smart contracts such as decentralized applications (dApps).

Base fee: This is the minimum amount of gas fee required per transaction and varies according to the current demand. When the number of users on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain is high the transaction fee is also relatively high and vice versa. This is because the network automatically adjusts the ETH gas depending on the number of users interacting with it.

Tip: The tip, also known as the priority fee, is a transaction charge that users pay to facilitate faster transactions. In other words, it is an incentive to the validators to give first preference to the transaction. Therefore, the higher the tip, the faster the transaction.

Nevertheless, it is essential to note that if a user sets a fee which is lower than the required minimum the transaction will not succeed. At the same time, such an individual loses that amount. The reason is that the validators would have done their part and require compensation for that.

## Why are ETH fees so high? 
Although <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> charges high transaction costs, the users can play their part to pay less. We hinted above that the Gwei gas that users pay depends on the demand for <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> products. Currently, the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain has the most products on the blockchain because it has many decentralized applications.

For instance, many people access [decentralized finance](https://www.gate.io/blog_detail/196/Decentralized-Finance-DeFi-A-Technology-That-Challenges-Centralization "decentralized finance") (DeFi) applications which <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> hosts. Many non-fungible token ([NFT](https://www.gate.io/learn/articles/what-are-nfts/4 "NFT")) and metaverse smart contracts exist on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network and they attract new users.

![](https://gimg2.gateimg.com/image/article/167835483411141678354700_.pic.jpg)
<a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> gas fee- Blockchains

As a fact, there are over 3,000 dApps which use the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain. According to some estimates, more than 100,000 daily active users participate in these dApps, executing more that 250,000 transactions per day. It is this high demand for products that exist on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain that pushes the gas fee up. 
 
## How to spend less on gas fees? 
There are ways in which the users can reduce the transaction fees they pay on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain.

### Make your transactions at suitable time
The first and important thing is to execute the transaction at a time when fewer people are using the blockchain. This lowers the base fee since it fluctuates in response to the network demand at any time. In most cases, the base fee is lower during the weekends than during weekdays.

The second way to reduce the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> gas fee is to set the maximum gas limit for your transaction. By doing this, you are telling the blockchain that you only want to use a certain quantity of Gwei to make that transaction. <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> will refund you after the transaction is complete. However, one should not set the gas limit below the minimum amount needed.

The other option to reduce the transaction cost is to use layer-2 networks such as <a href="/price/optimism-op" target="_blank" class="blog_inner_link">Optimism</a>. <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> layer-2 solutions are extensions to the blockchain that increase the transaction speed and throughput. Apart from <a href="/price/optimism-op" target="_blank" class="blog_inner_link">Optimism</a>, <a href="/price/dydx-dydx" target="_blank" class="blog_inner_link">dYdX</a>, <a href="/price/loopring-lrc" target="_blank" class="blog_inner_link">Loopring</a> and Arbitrum are the other layer-2 solutions on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network.

With layer-2 solutions, the transaction fee is less than on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain because they execute them off-chain to save gas and increase network speed. Basically, a layer-2 scaling solution reduces the gas units per transaction.

### Alternatives to Gwei
There are no alternatives to Gwei when making transactions on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain. This is because it is the only standard unit for gas fees on the network. It is important to note that the blockchain does not use the other <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> denominations like Kwei, Mwei, Twei, and Pwei as transaction charges.

However, other blockchains such as <a href="/price/litecoin-ltc" target="_blank" class="blog_inner_link">Litecoin</a> <a href="/price/dogecoin-doge" target="_blank" class="blog_inner_link">Dogecoin</a>, <a href="/price/monero-xmr" target="_blank" class="blog_inner_link">Monero</a>, Binance Smart Chain, <a href="/price/stellar-xlm" target="_blank" class="blog_inner_link">Stellar</a> and <a href="/price/cardano-ada" target="_blank" class="blog_inner_link">Cardano</a> use their own native cryptocurrencies as gas fee. Also, these networks have less transaction charges than the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network.

## Conclusion
In short, Gwei is a fraction of ETH which people use to make payments for transaction costs. It is also very easy to change Gwei to ETH and vice versa. For example 1ETH is equal to one billion Gwei. The other denominations of ETH are Wei, Kwei, Mwei, Gwei, Microether and Milliether, although people rarely use these.

## FAQs
### How do you read Gwei price? 
Gwei is a denomination of ETH used to pay for transaction charges on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network. One billion Gwei, also called nanoether or Shannon, make 1 ETH. Although there are denominations of ETH such as Wei, Kwei, Mwei, Gwei, Microether and Milliether, people widely use Gwei since it is used to settle transaction charges.

### How much Gwei per ETH?
One billion Gwei makes one ETH, the native cryptocurrency for the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain. ETH Gwei is commonly used for making payments for transactions that occur on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network. The standard transaction fee on the blockchain is 21,000 Gwei. However, it increases depending on the complexity of the transaction as well as the time of execution.

### How is Gwei calculated? 
You can change Gwei to ETH and vice versa since one billion (100, 000,000) Gwei equals 1ETH. In other words, 1 Gwei equals 0.000000001 ETH. There are many ETH Unit Converters on the internet which one can use to change ETH to Gwei and vice versa. You can also convert Gwei to United States dollars depending on the current [price of ETH](https://www.gate.io/price/ethereum-eth/eur "price of ETH").

### Will <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> 2.0 reduce the gas fee? 
<a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> 2.0 will reduce the network’s transaction fee.This is because the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> sharding, which is an aspect of <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> 2.0, is the one that will result in lower transaction fees as it will increase the network speed and throughput.  Already, the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> developers have promised to [launch the Shanghai upgrade in 2023](https://www.gate.io/blog_detail/1943/ethereum-to-launch-shanghai-upgrade-in-march-2023 "launch the Shanghai upgrade in 2023").

### What is Gwei gas? 
Gwei gas is a payment made on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network to compensate validators for verifying transactions on the blockchain. The payment is calculated in Gwei because the value of ETH is very high for the purpose of establishing the transaction cost. The standard fee on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> blockchain is 21,000 Gwei.

### Why is Gwei gas so high?
Gwei gas is very high because there is high demand for products that [exist on the Ethereum blockchain](https://www.gate.io/learn/articles/what-is-ethereum-2-0/102 "exist on the Ethereum blockchain"). For example, the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network hosts many decentralized applications where users make thousands of transactions per day. The base fee depends on the number of active users on the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> network at any time.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>