What Is Gas Fee?
Also known as: Gas Fees, Network Fee, Transaction Fee, Ethereum Gas Fee
In short
A gas fee is the fee paid for the network to process a transaction or smart contract call on Ethereum and EVM-compatible blockchains; it is calculated by multiplying the amount of gas used by the price per gas.
The term “gas,” by analogy to a vehicle's fuel, refers to the unit that measures computational work on the network. Every transaction, such as a transfer, token swap, or NFT mint, requires a certain amount of computation and storage; more complex transactions consume more gas. The gas fee serves two purposes: it rewards the validators who run the network and economically deters spam attacks on the network with unnecessary or malicious transactions.
On Ethereum, since EIP-1559, the fee consists of a base fee that is burned and a priority fee that goes to the validator. When demand increases, the base fee rises automatically; for this reason, fees can multiply within a short time during a popular NFT sale or sharp market moves. Failed transactions also pay a fee for the gas used up to that point.
High fees were decisive in the development of layer 2 solutions such as Arbitrum and Optimism. These networks reduce the cost per user by recording transactions on Ethereum in batches; blob transactions that came with the Dencun upgrade in March 2024 also significantly reduced layer 2 fees.
Last updated: · This content is for information purposes only and is not investment advice.