Miners have raised Ethereum’s gas limit to almost 15 million for the first time in a bid to relieve transaction congestion at a time when on-chain activity is increasing with ether’s price (ETH) up 2.8% on the day to $2,456.
The Ethereum gas limit sets a ceiling for how many operations can be included in each block. Before the increase, miners set Ethereum’s gas limit at 12.5 million until Ethereum creator Vitalik Buterin suggested raising it last week on Reddit, in light of recent code optimizations activated on the network.
“Now that the chain is safer, we can increase the gas limit, which makes every application cheaper,” Buterin said.
What is ‘gas’?
As explained by software developer Kevin Ziechmann in a blog post on the Ethereum Foundation website:
“Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network…Gas [is] paid in Ethereum’s native currency, ether (ETH). Gas prices are denoted in Gwei, which itself is a denomination of ETH – each Gwei is equal to 0.000000001 ETH (10-9 ETH).”
As background, the gas limit restricts the amount of data and computational effort required by miners to process a single block on the network. The cost of each unit of gas in terms of ETH is decided by the user, who can set a high or low gas price. Miners prioritize transactions and operations with high gas prices (and hence, higher total transaction fees) to maximize the rewards they earn on the network.
Due to finite block space and an ever-increasing volume of on-chain activity, gas fees have been soaring on Ethereum. Depending on the transaction type, associated fees can range from a few bucks to hundreds of dollars.
Increasing the gas limit allows more data to be included in each Ethereum block, which may contain a variety of operations such as peer-to-peer transfers of ETH, the creation of a new smart contract, or the exchange of fungible and non-fungible Ethereum-based tokens.
Why Ethereum miners want higher gas limits
There are potential risks when it comes to raising Ethereum’s gas limit. Larger blocks require more energy to process and finalize on the part of miners and can increase the likelihood of chain splits and orphaned blocks. That is why there is a limit to how quickly miners on Ethereum can raise the gas limit.
“As a function of the Ethereum protocol, miners can only adjust block gas limits by 0.0976% from the previous block’s gas limit. When miners collectively agree a block gas limit is too low or too high, they can slowly work to edge that limit up or downwards with each consecutive block,” CoinDesk’s Christine Kim explained in a research report.
Ever since the completion of Ethereum’s latest backward-incompatible, system-wide upgrade, also called a “hard fork,” major mining pools have been signalling their intentions to raise the gas limit from 12.5 million to 15 million.
On April 20, Bitfly, the operator of Ethereum’s second-largest mining pool by hashrate, tweeted:
This is the seventh time in Ethereum’s history that miners have voted to increase the gas limit as a temporary solution to rising network fees. Along with the increase, Ethereum developers are also working on a parallel blockchain network, dubbed “Ethereum 2.0,” to reduce the issue of high fees and network congestion for the long-term.