Transaction fee in Ethereum
Starting with the London network upgrade, every block has a base fee, the minimum price per unit of gas for inclusion in this block, calculated by the network based on demand for block space. As the base fee of the transaction fee is burnt, users are also expected to set a tip (priority fee) in their transactions. The tip compensates miners for executing and propagating user transactions in blocks and is set automatically by CLV Wallet.
Transaction fee = Gas units (used) * (Base fee + Priority fee)
Let’s say Jordan has to pay Taylor 1 ETH. In the transaction, the gas limit is 21,000 units, and the base fee is 100 gwei. In addition, Jordan includes a priority fee of 10 gwei.
Using the formula above, we can calculate this as 21,000 * (100 + 10) = 2,310,000 gwei or 0.00231 ETH.
When Jordan sends the money, 1.00231 ETH will be deducted from Jordan’s account. Taylor will be credited 1.0000 ETH. Miner receives the tip of 0.00021 ETH. The base fee of 0.0021 ETH is burned.
Jordan can also set a max fee (maxFeePerGas) for the transaction. The difference between the max fee and the actual fee is refunded to Jordan, i.e., refund = max fee – (base fee + priority fee). Jordan can set a maximum amount to pay for the transaction to execute and not worry about overpaying “beyond” the base fee when the transaction is executed.
1.The definition of the concepts:
The gas limit
The gas limit is the maximum number of units of gas you are willing to pay to carry out a transaction or EVM operation. Remember that a standard transaction sending ETH usually costs approximately 21,000 gas. Many networks, such as EVM-compatible blockchain Harmony, use an identical model in which standard transactions also cost 21,000 gas.
Every block has a base fee which acts as a reserve price. To be eligible for inclusion in a block, the offered price per gas must equal the base fee. The base fee is calculated independently of the current block and is instead determined by the blocks before it – making transaction fees more predictable for users. When the block is mined, this base fee is “burned,” removing it from circulation.
Priority fee (tips)
With the new base fee getting burned, the London Upgrade introduced a priority fee (tip) to incentivize miners to include a transaction in the block. Without tips, miners would find it economically viable to mine empty blocks, as they would receive the same block reward. Under normal conditions, a small tip gives miners minimal incentive to include a transaction. For transactions that need to get preferentially executed ahead of other transactions in the same block, a higher tip will be necessary to attempt to outbid competing transactions.
To execute a transaction on the network, users can specify a maximum limit they are willing to pay for their transaction to be completed. This optional parameter is known as the maxFeePerGas. For a transaction to be executed, the max fee must exceed the sum of the base fee and the tip. The transaction sender is refunded the difference between the max fee and the sum of the base fee and tip.
Gwei is a unit of ether, the smallest denomination, which stands for gigawei (or 1,000,000,000). Gwei is used for gas fees, or rather payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain.
2.Send transactions on Ethereum in CLV Wallet
CLV Wallet will automatically set a recommended transaction fee (base fee + recommended priority fee) to reduce the amount of complexity burdened onto their users.
For transactions that need to get preferentially executed ahead of other transactions in the same block, a higher fee will be necessary to attempt to outbid competing transactions.
You can set the Gas limit, Max Priority fee, and Max fee manually by clicking the “custom gas fee”