How does Efirium work? (Part 2: network gas and fees, transactions, blocks)

“How Does Ethereum Work? (Part 2: Network Gas and Fees, Transactions, Blocks)”


Ethereum, as one of the most prominent blockchain platforms, has revolutionized the world of decentralized applications and smart contracts. In our previous article, we explored the fundamental concepts of Ethereum’s architecture and its underlying technology. In this continuation, we will delve deeper into the inner workings of Ethereum, focusing on network gas and fees, transactions, and blocks.


“Network Gas and Fees”


To ensure the security and efficiency of the Ethereum network, it employs a unique mechanism known as “gas.” In the context of Ethereum, gas refers to the computational unit used to measure the amount of computational work required to execute specific operations on the blockchain. Every operation or smart contract function requires a certain amount of gas to be executed successfully.


The reason behind using gas lies in preventing denial-of-service attacks. By making users pay for their computations in gas, it discourages malicious actors from clogging the network with resource-intensive tasks that could otherwise be executed for free. The cost of gas is denoted in Ether (ETH), Ethereum’s native cryptocurrency.


Transaction fees are directly related to the amount of gas consumed. When users initiate transactions or execute smart contracts, they must include a transaction fee, which is paid in Ether. The fee compensates miners for their computational efforts, as they are responsible for processing and validating transactions.




Transactions on the Ethereum network involve sending or receiving value between accounts. They can include regular Ether transfers or interactions with smart contracts. Each transaction contains vital information, such as the recipient’s address, the amount of Ether to be sent, and the gas limit.


The gas limit is the maximum amount of gas allocated for the transaction. It represents the highest computational cost a transaction can incur. If a transaction requires more gas than the specified limit, it will fail, but any unused gas will be refunded to the sender.




Transactions on Ethereum are grouped into blocks, and these blocks form the blockchain. A block is a collection of verified transactions, and each block contains a reference to the previous block, creating a chain of blocks — the blockchain.


Miners play a crucial role in the Ethereum network. They compete to solve complex mathematical puzzles to validate and add new blocks to the blockchain. The process of solving these puzzles is called “proof-of-work,” and the miner who successfully solves it gets to add the next block and receives a reward in Ether for their efforts.


The time it takes to mine a block is approximately 13-15 seconds. However, this can vary depending on network congestion and the computational power of the miners.




Ethereum’s groundbreaking technology and architecture provide a robust foundation for a multitude of decentralized applications and smart contracts. The concept of gas ensures the network remains secure and efficient, while transaction fees incentivize miners to validate and process transactions. Each transaction, carrying important information and a gas limit, contributes to forming blocks that constitute the immutable blockchain.


As Ethereum continues to evolve, with the ongoing development of Ethereum 2.0, its scalability, security, and efficiency are expected to improve further. This could unlock even more potential for the platform, making it a pivotal force in shaping the decentralized future of the digital world. Understanding the intricate workings of Ethereum empowers us to explore and embrace the possibilities of this revolutionary technology.