If you're a new user to the decentralized network, you might have been confused on why every transaction and execution has additional fees related to them. What are they and why do they exist?
What you encountered would be Ethereum gas, often measured in GWEI
(1 GWEI = 0.000000001 ETH).
Ethereum Gas is a unit that measures the amount of computational effort that it will take to execute certain operations. Every single operation that takes part in Ethereum, be it a transaction or smart contract execution requires some amount of gas.
What you also might have seen is that every time you check the fees, they are different, why is that?
This is because unlike centralized services, where there is a fixed fee of a certain percentage, decentralized services work on the back of a huge number of decentralized computers, users who provide these services are called miners.
Miners provide these services and for their effort they are rewarded with a small percentage of every transaction ever done on the network in form of Ether.
Fee values change because miners will always mine transactions that have a higher fee because they will earn a bigger reward. This is also the reason why when a big number of users want to perform transactions, fees rise since they are pretty much bidding on their transactions to go through faster.
How are these fees calculated?
Fees on key based wallet are rather simple to calculate because they have a thing called a gas limit, which is set to 21 000. This limit is set since transactions almost never require that much gas. Now that you have a fixed number, you can go and fetch the current gas prices on ETH Gas Station.
For example, price at the time of typing is 170, while 1 ETH is $1,538
170 x 21,000 = 3,570,000 GWEI
3,570,000 GWEI = 0.00357 ETH = $5.49
Okay, that appears cheap, why are prices in Pillar so high then?
Smart contracts require much more gas in order to perform certain actions and they have a much bigger limit than 21,000.
Why use Smart Contracts then if they are so expensive?
At the time of making, fees were extremely small, as time went on, this became a big issue. The reason the Smart wallet is still the way to go is because it offers much much more options than the Key wallet, which can only be used to trade tokens and nothing more, while the Smart Wallet offers much more features.
What should I do when prices are this big?
Best option would be to wait until they calm down a bit and avoid doing unnecessary transactions and wait while we implement solutions which will reduce these fees in the upcoming future.
How do I track fee prices?
A great site that can be used to track Smart contract prices would be here.