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Gas prices

Author

Benancio
May 16, 2024

Why gas prices fluctuate over time?

The blockchain works with a block-to-block system that is operated by miners. In exchange for this, they receive rewards in the network's currency.

When someone does a transaction (transfer, create, release, escrow, approve, etc.), by paying the gas, they are “buying” space in each block to send their order and have it recorded on the blockchain.

For this reason, when the demand for space is low, gas prices tend to fall, but when demand is high, the number of validators is not enough to handle all orders, so delays occur.

To have a better position in the queue and achieve a greater transaction speed, the users decide to pay a higher price than another one so that their order is taken first.

On the other side, this increase in price causes a greater interest for miners. So, new validators enter the market or current ones update their equipment, achieving a greater response power and eventually achieving a reduction in the gas price due to the greater operational capacity.

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