What are Gas Fees in Crypto?

By Ehis Ohiwerei

What are Gas Fees?

Gas fees are the name given to transaction fees on the Ethereum blockchain network. Users pay these fees to miners to validate transactions.

You will need ETH to pay for them as a user, as that is the only acceptable coin. Gas is the unit used to measure the amount of work done to process transactions and smart contracts on Ethereum.

Consider this an SI Unit similar to the units (like degrees for temperature) we learned in school. As a user who is using more complex smart contracts and codes, your transactions will require more gas to perform their function.

The same rule applies to your gas usage in real life; the bigger the car, the more gasoline it needs to run.

Ethereum gas fees are often denominated in ‘Gwei,’ a unit of measure for the Ether cryptocurrency. Under EIP-1559, users pay base and priority fees to manage gas fees.

The base fee is the lowest gas required to validate transactions, while the priority fee is a tip to miners. The platform allows users to set the amount of tip they want to give validators.

While other cryptocurrencies may use different terms for transaction fees, the term “gas” is commonly used when referring to fees on Ethereum blockchains due to Ethereum’s status as the second-largest crypto by market cap.


  • Gas is the name of the price users pay for a transaction on the Ethereum blockchain.
  • Gwei denotes a Gas fee, as it is the unit, but it can sometimes be denoted as ETH.
  • Gas Fees are fixed based on the number of transactions users want to be validated.
  • Validators and miners establish their price based on the work to be done and how much Gas this will require from them.

How Gas Fee Works

Ethereum and other cryptocurrencies use a blockchain, which is like an online bookkeeping mechanism for transactions that get sent to a bunch of different computers in an extensive network. This differs from cloud computing, which is more centralized and uses only one computer.

Gas pays these computers for doing the work needed to keep Ethereum running smoothly. Crypto miners are the users in the crypto ecosystem who validate the transactions on the network and get paid the gas fees. Gas is paid in Ether, which is Ethereum’s own special kind of coin that you can buy and trade on different crypto exchange apps.

Why Ethereum Gas Fees are so High

Ethereum gas fees can sometimes be high, even hundreds of dollars, especially when many people are trying to buy or swap things on the network. Ethereum is great because it’s secure and decentralized, but it could be better at being super-fast, which can be achieved through scalability.

The network should be faster because it can only handle around 14 transactions per second, and sometimes there are more than that waiting to be processed. While the network is not fast, it is safe and decentralized.

When co-founder Vitalik Buterin was asked, he called this phenomenon the “blockchain trilemma“. This means that blockchain has three core – scalability, decentralization, and safety, but a good developer knows one of these three usually suffers when large transactions are involved.

When the network gets busy, validators who check the transactions tend to pick the ones with the highest gas prices, which is like a fee you must pay to process your transaction. It’s like a blind auction, where people raise bids until their transaction gets picked.

The transaction that isn’t picked right away is sent to a waiting area for transactions, which is called the “mempool.” Since the London upgrade, every block has had a new fixed base fee, depending on how many transactions were processed in the last one.

But you can still add a priority fee tip if you want your transaction to go through faster. Due to this, gas fees keep going up until the number of transactions left is small.

How to spend less on Gas

Due to the higher gas fee, users have been looking for ways to spend less money on gas to get their transactions validated. Here are three sure ways you, as a user, can reduce the money you pay as gas fees.

Right timing

You can reduce the base fee and tip to reduce the money you spend on gas. When doing a transaction, is it impossible to reduce the amount of gas needed?

However, you can lower the base fee by making transactions on the network when fewer people are using it. This is because when there is more demand for Ethereum, more work is required to interact with the network, and gas fees are higher.

Research has shown that weekends are usually the best time to make your transaction, as fewer transactions happen on the network. Another way to spend less on gas is to reduce your tip, which is the additional cost you can give validators to make your transactions faster.

If you are not in a hurry, you should be patient and reduce your tip to save money.

Set Gas Limits

You can also reduce your gas fees by setting a maximum limit on your transaction. This means you tell Ethereum blockchain validators that you only want to spend a certain amount, and if your transaction doesn’t use all of it, you get a refund for the difference.

This helps you save money and gives you transactional and financial security with validators. But be careful; If you set a maximum fee below the required gas limit for a transaction, you will lose your money, and validators will not have validated your transaction.

Using Layer 2 Scaling

You can use Ethereum layer 2 scaling solutions to spend less on gas. You can use tools to extend the Ethereum network’s processing time, making transactions faster and increasing the number of transactions the network can process per second.

What layer 2 means is that a user can carry out transactions somewhere else (off the chain) and then verify them on the Ethereum network before being recorded on the blockchain. This reduces the number of gas units required to complete a transaction, making it cheaper.

Since these solutions only interact with Ethereum during transaction validation. In this process, less gas is needed by miners, which means that the network itself will no longer be as congested as it would have been, resulting in a lower base fee for all users. Some popular examples of these tools include Arbitrum, Looping, and dYdx.

Why do I have to pay the Gas Fee?

Ethereum gas fees are paid to validators for securing the blockchain and network. Validators play a crucial role in maintaining the network’s security and stability; without them, the network would be at risk.

The gas fees allow validators to stake their ETH and validate transactions, ensuring that the network remains secure and operational. Therefore, gas fees are essential for the proper functioning of the Ethereum network.

How is Gas Fee calculated?

The gas price is the amount of Ether (ETH) that a user is willing to pay for each unit of gas, denominated in Gwei. Gwei is a subunit of ETH, where 1 ETH is equal to 1 billion Gwei. The amount of transaction you want to get validated determines the gas price and is set by validators.

There are two primary components of a gas fee calculation. These are the gas limit and the base fee.

The gas limit is simply the highest amount a user wants to pay for a transaction. As a user, you set the gas limit to stay within this and protect yourself from overpriced validators. However, if you put it too low, the transaction will fail.

To calculate the total gas fee, you simply multiply the gas price by the gas limit. For example, if the gas price is 20 Gwei and the gas limit is 50,000, the total gas fee would be 1,000,000 Gwei, or 0.001 ETH. Gwei is a tiny unit of Ether, where 1 Gwei equals 0.000000001 ETH.

It measures how much gas fees cost on the Ethereum network. For instance, if the gas fee for a transaction is 30 Gwei, that would be equivalent to 0.000000030 ETH.

The base fee was introduced as part of the London upgrade, and it depends on how many transactions users are trying to validate on the network. Each block on the Ethereum blockchain has a base fee, which is set to burn as a mechanism to keep the value of Ethereum high.

The issuance of new ETH makes it a deflationary tool. As a user, you can include a priority fee and a tip to compensate miners with each transaction. The higher the priority fee, the faster the transaction will be processed.

A practical example to help you understand better is this:

Let us assume that you want to mint 1 ETH.

  • The gas limit for 1ETH is 21,000 units.
  • The base fee is 50 Gwei.
  • If you add a tip of 20 Gwei.

Your total gas fee will be;

  • Gas limit x (base fee + tip)
  • 21000 x (50 + 20) = 1,470,000 Gwei.

Remember that 1 Gwei is equal to 0.000001 ETH. Therefore, your total gas fee in ETH is 0.00147 ETH.

What is a gas fee on NFTs?

A gas fee is a charge for processing transactions on the Ethereum blockchain. When users create or trade non-fungible tokens (NFTs), they must pay a gas fee to compensate the validators who process and verify the transaction.

The amount of the gas fee can vary depending on the complexity of the transaction and the demand for processing power on the Ethereum network. This means that the gas fees are higher when the network is congested.

High gas fees can be a problem for people who want to create or trade NFTs, as they can quickly become expensive. To reduce the cost of gas fees, users can transact during periods when the network is less congested.

They can also use gas fee estimator tools to predict the cost of a particular transaction. Some NFT marketplaces have implemented layer-2 scaling solutions, which can reduce gas fees by performing transactions off-chain and settling them on-chain only when necessary.

This can make NFT transactions more accessible to a broader range of users.

Frequently Asked Questions

Does every crypto have a Gas Fee?
Yes, all transactions come with a gas fee. You must pay a gas fee when you transact on the Ethereum blockchain. The amount of the gas fee depends on how big and complex the transaction is.
Which blockchain has no Gas Fee?
The Bitgert team has created a new blockchain called the BRISE BRC20. Unlike other blockchains, transactions on this blockchain are entirely free; the BRISE BRC20 costs almost nothing to use. If you need to pay gas fees for token transactions, it's only a tiny fraction of a penny, which is about $0.0000000000001.
What time are Gas Fees lowest?
If you want to save money on gas fees when using Ethereum, it's best to do your transactions during certain times. Gas prices are the lowest on weekdays between midnight and 4 a.m. (EST). This is because most people in America are sleeping, while Europe is starting their day and Asia is finishing their workday. Weekends are also good days, as users are busy with families or outings.
What are Gas Fees in Crypto?

What are Gas Fees in Crypto?

By Ehis Ohiwerei - min read
Continue loading