What Is Gas Limit?
The gas limit is the maximum amount of gas (computational units) that can be consumed. It exists at two levels: the transaction gas limit (set by the sender, capping how much computation their transaction can use) and the block gas limit (set by the network, capping the total gas in a single block). If a transaction exceeds its gas limit, it reverts — the computation stops and the gas is consumed.
How Gas Limit Works
The block gas limit determines how many transactions fit in each block and therefore the chain's throughput. Ethereum's block gas limit is currently ~30 million gas. A simple ETH transfer uses ~21,000 gas, so a block could fit ~1,400 simple transfers. Complex DeFi transactions use 200,000-500,000+ gas, drastically reducing the number of transactions per block.
Why It Matters for Traders
For DeFi traders, setting the right transaction gas limit is important: too low and the transaction fails (you lose gas but the transaction reverts), too high and you're reserving more than needed (though only used gas is charged). Most wallets estimate gas limits automatically, but for complex transactions, adding a 20-30% buffer above the estimate prevents failed transactions during volatile gas price conditions.
