Transaction costs on blockchains are set by the users. With increasing charge levels, the likelihood that a transaction will be handled swiftly rises. In this article, we examine the Ethereum blockchain’s transaction fee optimization challenge. This issue entails figuring out the lowest price a user should pay in order for their transaction to be completed with a certain probability and within a certain window of time.
To do this, a novel strategy based on the Monte Carlo method can be utilized to forecast the likelihood that a transaction will be mined within a specified window of time. The quality of the outcomes is highlighted by numerical results using actual data.
The blockchain is a system that relies on transactions. In Ethereum, a new block is produced and added to the main chain on average every 15 s. The freshly validated transactions affecting the system state are contained in these blocks. Miners, who are players in the system, produce these blocks. In the majority of blockchains, users decide how much they are ready to pay miners in exchange for their transactions. The number of blocks that must pass before being mined can vary significantly depending on the users’ payment amounts.
The Ethereum blockchain
The blockchain of Ethereum serves as a decentralized transactional database. A blockchain is not controlled by any one entity; instead, it is only being grown and maintained by actors. The Proof of Work protocol ensures that no user may alter, hack, or shut down the system.
The way that outside users communicate with a blockchain is through transactions. Each blockchain has a currency, whose units are referred to as tokens. Similar to how ethers in Ethereum and bitcoins in the Bitcoin blockchain may be exchanged through transactions, these tokens can as well. A Wei is an ether unit, and a GWei is a billion Weis. Interaction between accounts occurs whenever a transaction is sent from one account to another.
In Ethereum, smart contracts are kept in “contract accounts,” which can only be opened using a transaction known as a contract creation transaction and containing the contract’s code. The code of the contract is performed when such an account receives a transaction, potentially along with some data.
• If a smart contract has an indefinite loop, the miners will become stuck while trying to execute it, which raises additional problems for blockchain operation management.
Calling a contract requires more resources than other transactions, and until the operation is actually executed, the miner is unaware of its cost.
In order to avoid these problems, Ethereum has added the gas mechanism. Sending a transaction will cost you at least 21,000 gas. Every action in a contract has a fixed gas cost.
Introduce a delay between the date of mining of the previous block and the date of reception of a transaction, to offset two phenomena:
The reception delay of the transaction: The date of broadcasting considered for a transaction is its reception date and can be slightly different from the broadcasting date.
The creation time of a block: When a miner creates a block, it takes time to add all the transactions, and if a transaction arrives during this period, it might be added to this block.
How to Calculate Ethereum Gas Fees?
You should be aware of the specifics of calculating gas fees in addition to the effects of supply and demand on Ethereum. It’s interesting to note that before learning how to compute gas fees, one should discover the variables that affect the price of Ethereum gas. The following criteria are used by miners to determine gas fee costs.
- The existing demand for gas
- Power or Computational resources required for processing smart contracts
- Total number of transactions
- Size of the smart contract which has to be executed
The minimum gas fees needed to process a transaction in the Blockchain are highly time-dependent, according to various phenomena like system congestion.
The users choose between struggling to manually set a low gasprice value corresponding to the actual system state, or they fix a high value that will ensure the transactions to be mined but that will spend an unnecessary amount of ether. Some prediction methods provide value for the gasprice but most of these methods are not reliable and not configurable.