Why Do Gas Fees Fluctuate?
Gas fees fluctuate primarily due to network congestion and the supply and demand for block space. When more users try to transact simultaneously, the demand for limited block space increases, driving up the price.
Network upgrades or changes to the underlying protocol's fee mechanism can also influence these costs. The base fee is adjusted dynamically based on how full the previous block was.
Glossar
Gas Fees
Mechanism ⎊ Gas fees represent the computational cost required to execute transactions on a blockchain network, functioning as a deterrent against denial-of-service attacks and incentivizing miners or validators to process transactions.
Block Space
Capacity ⎊ This term quantifies the finite data volume available within each successfully mined block, representing a scarce resource for transaction inclusion.
Supply and Demand
Equilibrium ⎊ The interplay of supply and demand within cryptocurrency, options, and derivatives markets establishes a dynamic equilibrium price, reflecting the aggregate intentions of buyers and sellers.
Network Congestion
Latency ⎊ Network congestion within cryptocurrency, options trading, and financial derivatives manifests as increased latency, directly impacting execution speeds and potentially leading to adverse selection against slower participants.
Base Fee
Cost ⎊ The base fee represents the minimum amount required to include a transaction in a block on certain blockchain networks, notably Ethereum following the EIP-1559 upgrade.