# Overview

The processing cost of a MultiversX transaction is determined by its gas limit, the actual gas consumption, and the gas price per gas unit, leading to a processing fee in EGLD that may be subject to a gas refund in certain cases.

## Cost of processing (gas units)​

Each MultiversX transaction has a processing cost, expressed as an amount of gas units. At broadcast time, each transaction must be provided a gas limit (gasLimit), which acts as an upper limit of the processing cost.

### Constraints​

For any transaction, the gasLimit must be greater or equal to erd_min_gas_limit but smaller or equal to erd_max_gas_per_transaction, these two being parameters of the Network:

networkConfig.erd_min_gas_limit <= tx.gasLimit <= networkConfig.erd_max_gas_per_transaction

### Cost components​

The actual gas consumption - also known as used gas - is the consumed amount from the provided gas limit - the amount of gas units actually required by the Network in order to process the transaction. The unconsumed amount is called remaining gas.

At processing time, the Network breaks the used gas down into two components:

• gas used by value movement and data handling
• gas used by contract execution (for executing System or User-Defined Smart Contract)
note

Simple transfers of value (EGLD transfers) only require the value movement and data handling component of the gas usage (that is, no execution gas), while Smart Contract calls require both components of the gas consumption. This includes ESDT and NFT transfers as well, because they are in fact calls to a System Smart Contract.

The value movement and data handling cost component is easily computable, using on the following formula:

tx.gasLimit =    networkConfig.erd_min_gas_limit +    networkConfig.erd_gas_per_data_byte * lengthOf(tx.data)

The contract execution cost component is easily computable for System Smart Contract calls (based on formulas specific to each contract), but harder to determine a priori for user-defined Smart Contracts. This is where simulations and estimations are employed.

## Processing fee (EGLD)​

The processing fee, measured in EGLD, is computed with respect to the actual gas cost - broken down into its components - and the gas price per gas unit, which differs between the components.

The gas price per gas unit for the value movement and data handling must be specified by the transaction, and it must be equal or greater than a Network parameter called erd_min_gas_price.

While the price of a gas unit for the value movement and data handling component equals the gas price provided in the transaction, the price of a gas unit for the contract execution component is computed with respect to another Network parameter called erd_gas_price_modifier:

value_movement_and_data_handling_price_per_unit = tx.GasPricecontract_execution_price_per_unit = tx.GasPrice * networkConfig.erd_gas_price_modifier
note

Generally speaking, the price of a gas unit for contract execution is lower than the price of a gas unit for value movement and data handling, due to the gas price modifier for contracts (erd_gas_price_modifier).

The processing fee formula looks like this:

processing_fee =    value_movement_and_data_handling_cost * value_movement_and_data_handling_price_per_unit +    contract_execution_cost * contract_execution_price_per_unit

After processing the transaction, the Network will send a value called gas refund back to the sender of the transaction, computed with respect to the unconsumed (component of the) gas, if applicable (if the paid fee is higher than the necessary fee).