CoinucationWhat are gas fees?
6 min read · Updated Oct 6, 2026 · By Coinucation Editorial
- Gas is the unit of computational work on Ethereum, and the fee is gas used multiplied by the gas price.
- Since EIP-1559, the base fee is set by the network and burned, while an optional tip goes to validators.
- Fees rise when blocks are full and fall when demand drops, and they are paid in the native currency.
- Layer 2 networks and good timing are the main ways to reduce what you pay.
The short answer
Gas fees are the payments users make to have their transactions processed on a blockchain. The term comes from Ethereum, where every operation, from a simple transfer to a complex smart contract call, consumes a measured amount of computational effort called gas. You pay for that gas in the network's native currency, which on Ethereum is ether.
The fee serves two purposes. It compensates the validators who do the work of including and verifying transactions, and it prevents abuse. Without a cost per operation, anyone could flood the network with junk or write a program that runs forever. Gas puts a price on every step, so wasteful or malicious activity is expensive.
Other blockchains have transaction fees too, even if they do not use the word gas. Bitcoin charges fees based on the data size of a transaction, and Solana charges a small fixed fee plus optional priority fees. The underlying idea is the same: block space is limited, and fees allocate it.
How gas is calculated on Ethereum
A transaction's total fee is the amount of gas it uses multiplied by the price per unit of gas. Gas used depends on what the transaction does. A simple ether transfer costs a fixed 21,000 gas. A token swap on a decentralized exchange might use 100,000 to 200,000 gas, and minting an NFT can use more. The complexity of the code determines the gas, not the dollar value being moved.
Gas price is quoted in gwei, where one gwei is one billionth of an ether. Since an upgrade in August 2021 known as EIP-1559, the gas price has two parts. The base fee is set automatically by the network based on how full recent blocks were, and it is burned, meaning permanently destroyed. On top of that, users can add a priority fee, or tip, which goes to the validator and helps get the transaction included faster.
For example, if the base fee is 10 gwei and you add a 2 gwei tip, a simple transfer costs 21,000 times 12 gwei, which is 252,000 gwei or about 0.00025 ether. Your wallet estimates the gas and suggests prices automatically, and you usually set a maximum you are willing to pay. Any unused portion of that maximum is returned.
Why fees go up and down
Each block has a limited amount of gas it can contain, so when many people want to transact at once, they compete for space. The base fee rises automatically when blocks are more than half full and falls when they are less than half full. During a popular NFT mint, a market crash, or a token launch, fees can spike many times over within minutes.
At quiet times, such as weekends or overnight in the busiest time zones, fees on Ethereum have often been a few dollars or less for a swap. At peak moments in 2021 and 2022, the same swap could cost well over one hundred dollars. Since the March 2024 Dencun upgrade and the growth of layer 2 networks, average fees on the main network have been substantially lower than in those peak years.
Because fees are paid in ether, the dollar cost also moves with ether's price. A fee of 0.001 ether is a very different amount depending on whether ether is worth one thousand or four thousand dollars. Wallets usually show the estimated dollar value to help you judge. Comparing fees in dollars rather than gwei makes trends across time easier to understand.
Gas on other networks
Layer 2 networks such as Arbitrum, Optimism, and Base process transactions off the Ethereum main chain and then post compressed results back to it. Users pay gas on the layer 2 in ether, but because many transactions share the cost of one posting, individual fees are usually a few cents. This is where most everyday Ethereum activity now happens.
Solana charges a tiny base fee per transaction, typically a fraction of a cent, with an optional priority fee during congestion. Bitcoin fees are based on the size of the transaction in bytes rather than computation, and they rise sharply when the mempool, the waiting area for unconfirmed transactions, fills up.
Comparing fees across chains is not just about the sticker price. A cheaper network may have fewer validators, a shorter track record, or weaker security guarantees. Fees are one part of the tradeoff between cost, speed, and decentralization that every blockchain makes. A fee that is low because the network has few validators is not the same as a fee that is low because the design is efficient.
- Ethereum mainnet: highest fees, strongest security and liquidity
- Layer 2 networks: cents per transaction, settle to Ethereum
- Solana: fractions of a cent, with priority fees during congestion
- Bitcoin: fees based on data size, spike when the mempool is full
Common mistakes
The most frequent problem is a transaction stuck pending because the gas price was set too low and the base fee rose. It will sit in the mempool until the price falls or you replace it with a higher fee. Most wallets offer a speed up option that resubmits the same transaction with a larger tip.
Running out of gas is another issue. If a transaction hits its gas limit before finishing, it fails, but you still pay for the gas consumed up to that point. This is most common with complex contract interactions where the wallet underestimates the required gas. Failed transactions cost money without doing anything, so check estimates before confirming.
Finally, people sometimes forget that they need the native currency to pay fees. Holding tokens on Ethereum without any ether means you cannot move them until you add some. The same applies on every chain: keep a small reserve of the gas currency in any wallet you use. Running out of gas currency mid session is a common and avoidable frustration.
How to pay less
The biggest saving comes from choosing the right network. For small transactions and routine DeFi activity, a layer 2 network is often the better choice, with fees a tiny fraction of mainnet. Reserve the Ethereum main chain for large transfers or interactions that require it. Many exchanges now allow direct withdrawals to layer 2 networks, which avoids paying mainnet gas just to get there.
Timing matters. Fee tracking sites show the current base fee and how it has moved recently. Waiting for a quiet period can cut costs sharply for non urgent transactions. Batching multiple actions into one transaction, where an application supports it, also saves gas. Some wallets also let you schedule a transaction to send when fees drop below a threshold.
Review the fee your wallet proposes rather than accepting blindly. Many wallets offer low, medium, and high options; the lowest is fine when you are not in a hurry. And always keep a small balance of the native currency so you are never stuck with assets you cannot move. A few dollars of ether set aside for fees prevents a lot of headaches.