Glossary
Gas fees
Gas fees are the transaction fees paid to use a blockchain such as Ethereum. Gas measures the computing work a transaction needs, and the fee equals gas used multiplied by the price per unit of gas.
Also called Gas, Gas fee, Network fee, Transaction fee, Gwei, Gas price
See also
Gas fees are what you pay to have a transaction processed on Ethereum and similar blockchains. “Gas” is the unit that measures how much computation a transaction requires: a simple ETH transfer needs 21,000 units, while a swap or an NFT mint, which run smart contracts, needs much more. Fees protect the network from spam and pay the validators who include transactions in blocks.
How gas fees work
Since the London upgrade of 5 August 2021 (EIP-1559), an Ethereum fee has two parts:
- The base fee, set by the protocol for each block. It rises when blocks are busier than the target and falls when they are quieter, by up to 12.5% per block. The base fee is burned, removing that ETH from circulation.
- The priority fee, or tip, which goes to the validator and encourages them to include your transaction.
Prices are quoted in gwei, one billionth of an ETH. Your wallet also sets a gas limit, the maximum units you accept to use, and a maximum fee you are willing to pay; any unused amount is not charged.
A concrete example
Ethereum’s documentation gives this calculation: a standard transfer uses 21,000 gas. With a base fee of 10 gwei and a tip of 2 gwei, the fee is 21,000 × 12 = 252,000 gwei, or 0.000252 ETH. Of that, 0.00021 ETH is burned and 0.000042 ETH goes to the validator. The same transfer during a busy period with a base fee of 50 gwei would cost about five times more.
Why it matters for users
Gas fees decide whether a small transaction makes sense. A $20 swap is pointless if it costs $10 in fees. Fees also explain why many users now transact on layer 2 networks, which batch transactions and post them to Ethereum, generally for a fraction of the cost.
Limits and tips
- A failed transaction still costs the gas used up to the point of failure.
- Setting the tip too low can leave a transaction pending.
- Other networks have their own fee systems: Bitcoin fees depend on transaction size in bytes, Solana uses a small base fee plus optional priority fees.
- Keep a little of the network’s native coin in your wallet: without it, you cannot move your tokens.