English
38491
 How does a “digital contract” written in code change the way we trust? Hello everyone, today, we are going to talk about two crucial concepts in the Ethereum world-smart contracts and gas fees. If Bitcoin is the gold of digital currencies, then smart contracts are the diamonds that make Ethereum unique.  Starting from the vending machine Imagine that on a hot afternoon, Xiao Wang, a programmer from Zhongguancun, Beijing, walked into the lobby of an office building, stuffed a 10-yuan note into the vending machine, pressed the B5 button, and a can of Coke fell out. This simple transaction perfectly explains the core idea of smart contracts: the logic of "if...then...". If we move this logic to the blockchain, we get a smart contract. A smart contract is a contract that uses computer language instead of legal language to record terms. It is a computer application that runs on a blockchain database and can automatically process data according to preset conditions. The gas fee is like the note inserted into the vending machine - it is the "fuel" that drives the entire system.  The birth of smart contracts: a genius idea The concept of smart contracts was actually proposed by cryptologist Nick Szabo as early as the 1990s. He envisioned an ideal protocol, but limited by the technical conditions at the time, this concept remained in the theoretical stage for a long time. The real turning point came in 2013, when young Vitalik Buterin (known as V God in the world) proposed the idea of Ethereum. On July 30, 2015, the Ethereum mainnet was officially launched, bringing smart contracts from theory to reality for the first time. Buterin’s genius is that he realized that blockchain can not only record monetary transactions, but also execute code. It would be like discovering that telephone lines could carry not just voice but data—thus creating the Internet.  Gas Fee: The “Fuel” of the Ethereum Network” So, what exactly is gas fee? Why is it needed? Simply put, Gas is a unit of measurement of computing resources required for operations on the Ethereum network. Whether you are sending ETH, trading on Uniswap, or minting NFTs, every operation requires a gas fee. The existence of gas fees has three important functions: 1. Compensate validators: paid to nodes that process transactions and maintain the network 2. Prevent spam: Prevent cyberattacks by attaching a cost to each action 3. Resource allocation: Prioritize transactions that are willing to pay higher fees when the network is congested Since the Dencun upgrade in 2025, Ethereum gas fees have undergone revolutionary changes, with fees dropping by 95%. Transactions that previously cost $86 now cost an average of just $0.39.  Gas fee calculation: from Gwei to USD To understand gas fees, we need to first understand the unit of measurement. Gas prices are usually measured in Gwei, with 1 Gwei equal to 0.000000001 ETH. The unit is named after cryptologist Dai Wei. The current gas fee calculation formula (based on 2025 data) is: Total gas fee = (basic fee + priority fee) × used gas units As an example: Let's say you need 21,000 Gas units to send 1 ETH. If the base fee is 10 gwei and the priority fee is 2 gwei, then the total cost is: 21,000 × (10 + 2) = 252,000 gwei = 0.000252 ETH.  How Smart Contracts Work: Code is Law The core feature of smart contracts is automatic execution. Once the preset conditions are met, the contract will be automatically executed without any third-party intervention. For example: flight delay insurance based on Ethereum. If the flight is delayed for more than 2 hours, the claim will be automatically triggered and the compensation will be paid directly to the insured's digital wallet. The entire process does not require the intervention of insurance company employees, and there is no room for wrangling. The operating mechanism of smart contracts includes three steps: 1. Contract construction: multiple participants jointly formulate contract terms 2. Contract storage: spread to each node through the P2P network and stored in the blockchain 3. Contract execution: Check the status regularly, automatically execute and notify the user when conditions are met  Real-world applications: How smart contracts are changing the world The real power of smart contracts lies in its application potential. In Tianjin, China, the government is exploring the use of smart contracts on government affairs platforms to automatically complete procedures such as program approval and tax filing. This is expected to achieve "at most one trip" or even "no trip once" government services. In the financial field, DeFi (decentralized finance) is entirely built on smart contracts. For example, decentralized lending platforms allow users to make direct deposits to earn interest, or borrow against assets, with all processes automatically managed by smart contracts. Even in the field of supply chain, smart contracts can track the entire process of goods from production to sales, and every step is recorded on the blockchain to ensure the authenticity of the product.  Warm reminders for newbies in the currency circle For those new to Ethereum, here are some practical suggestions: 1. Understand the gas fee mechanism Before making a transaction, understand the current network conditions. Live Gas prices can be viewed using tools such as Etherscan. Fees are typically higher during weekday peak hours (Tuesday to Thursday), while weekend early morning savings can range from 25-40%. 2. Optimize trading time Non-urgent transactions can be scheduled during times when network congestion is low, such as weekends or early mornings. Set gas prices reasonably to avoid unnecessary waste. 3. Leverage Layer 2 Solutions Layer 2 networks such as Arbitrum, Optimism and Polygon can reduce costs by 90-99%. Most mainstream DeFi protocols already support Layer 2 operations. 4. Test the water with a small amount When trying it for the first time, test it with a small amount of money first, and then increase your investment after you are familiar with the entire process. Although smart contracts execute automatically, they cannot be modified once deployed. 5. Safety first Check the contract address carefully to avoid phishing websites. Use a hardware wallet to store large amounts of assets and back up your mnemonic phrases. 6. Treat rationally Do not invest more money than you can afford, and do not blindly pursue smart contract projects that are “guaranteed profits but no loss”.  Future Outlook: The Evolution of Smart Contracts Ethereum continues to evolve. Future upgrades such as Danksharding will further reduce costs by providing cheaper data space for Layer 2. This means that smart contracts will be more widely used. From vending machines to blockchain, from paper contracts to code-executed smart contracts, we are witnessing a revolution in trust mechanisms. Smart contracts are not only technological innovations, but also the reshaping of trust mechanisms—from relying on intermediaries to relying on mathematics and code. As The Economist puts it: Blockchain is a “trust machine” that allows people who don’t trust each other to collaborate. If you find this article helpful, please like, favorite and forward it. You are also welcome to share your Ethereum stories or questions in the comment area, let us learn and grow together! Disclaimer: This article is only to provide market information. All contents and opinions are for reference only. They do not constitute investment advice and do not represent the views and positions of this site. Investors should make their own decisions and transactions. The author and this website will not bear any responsibility for direct or indirect losses caused by investors' transactions! |
|
|
|
|
|
