What Is Gas Price?
Also known as: Gas Fee Rate, Price per Gas, Gwei Price
In short
Gas price is the fee paid for each unit of gas a transaction uses on Ethereum and EVM-compatible networks; it is usually expressed in gwei and, together with the amount of gas used, determines the total transaction fee.
The total transaction fee is the amount of gas used multiplied by the gas price per unit. For example, for a transfer that uses 21,000 gas, if the gas price is 20 gwei, the fee is 420,000 gwei, or 0.00042 ETH. When the network gets busy, competition for block space increases and gas prices rise; in quiet periods, they fall.
Before EIP-1559, which came with the London upgrade in 2021, the gas price on Ethereum was determined by a simple auction: users bid a price and miners chose the highest bids. With EIP-1559, the gas price was split into two components: a base fee that adjusts automatically in each block according to network demand and is burned, and a priority fee (or tip) paid to the validator for prioritized processing of the transaction. The user also sets the maximum fee they are willing to pay (max fee); if the sum of the base fee and priority fee stays below this limit, the difference is not charged.
The gas price is determined independently of ETH's dollar value; however, the fee paid in dollars depends on both together. Users rely on wallet estimates and gas tracking tools in block explorers to determine an appropriate gas price.
Last updated: · This content is for information purposes only and is not investment advice.