What is a gas fee in crypto? Ethereum gas fees explained
A gas fee is the fee you pay to have a transaction processed on Ethereum or a similar blockchain. It is paid in the network’s native token (ETH on Ethereum) and goes partly to the validators who process transactions and secure the network, while the rest is burned. Gas fees fluctuate based on network demand: when many people want to transact at once, the price of gas goes up.
What are gas fees?
Gas fees are the price of using a blockchain’s computing power. Every action on Ethereum, from sending ETH to swapping tokens, requires computational resources from thousands of computers, and gas is the unit that measures that computational effort.
Think of Ethereum as a large virtual computer that anyone can use, and gas as the fuel for each operation. Gas fees serve two purposes: they compensate validators for their work, and they stop people from flooding the network with spam, because every operation costs something.
Gas fees are not the same as exchange trading fees. A trading fee is what a crypto exchange charges you to buy or sell. A gas fee is a network fee: it goes to the blockchain, not to a company. You pay gas only when a transaction is actually written to the blockchain.
How do gas fees work?
Gas fees work by charging for every computational step a transaction needs. The Ethereum Virtual Machine (EVM), the software that runs on every node, gives each operation a fixed gas cost, and the total gas used depends on how much work your transaction does.
- Simple transfers: sending ETH from one wallet to another uses 21,000 units of gas.
- Token transfers and swaps: these run smart contracts, so they use more gas. Swapping tokens on a decentralised exchange can cost several times as much as a plain transfer.
- Complex operations: minting NFTs or using DeFi apps with several steps need even more gas.
One catch: if a transaction fails, for example because it runs out of gas halfway, you still pay for the gas used up to that point. The computational work was done, even though the result was cancelled.
How are Ethereum gas fees calculated?
Ethereum gas fees are calculated as gas used multiplied by the gas price.
Total fee = gas used × (base fee + priority fee)
The gas price is quoted in gwei, a tiny unit of ETH: one gwei is 0.000000001 ETH. Your wallet estimates the fee before you confirm, and you set a gas limit: the maximum amount of gas you allow the transaction to use. If the transaction runs on less, you only pay for the gas actually used.
Here’s a worked example, using an ETH price of €3,000 purely for the sake of the maths:
| Action | Gas used | Gas price | Fee in ETH | Fee in euros |
|---|---|---|---|---|
| ETH transfer | 21,000 | 10 gwei | 0.00021 ETH | €0.63 |
| Token swap | 150,000 | 10 gwei | 0.0015 ETH | €4.50 |
| Token swap, busy network | 150,000 | 50 gwei | 0.0075 ETH | €22.50 |
The same swap can cost five times as much at a busy moment. And because the fee depends on computation, not on the amount you send, it is the same whether you swap €20 or €20,000.
Base fee, priority fee and gas price
Since the London upgrade in August 2021 (known as EIP-1559), the gas price has two parts:
- Base fee: the mandatory price per unit of gas, set automatically by the network. It rises when blocks are full and falls when they’re not. The base fee is burned, permanently removing that ETH from circulation.
- Priority fee: a tip to the validator. A higher priority fee makes it more likely your transaction goes into the next block.
Wallets also let you set a maximum fee: the most you are willing to pay per unit of gas. You never pay more than that.
Why are gas fees sometimes high?
High gas fees are caused by network congestion. Each block has limited block space, so when many people want to conduct transactions at once, they compete by offering higher priority fees, and the base fee climbs block after block.
Congestion often comes in bursts: a popular token launch, a market crash when everyone rushes to move funds, or a hyped NFT mint. As early as December 2017, a game called CryptoKitties drew so much traffic that it slowed the whole Ethereum blockchain.
High gas fees are not the same as a high ETH price. Gas is priced in gwei, so the fee in euros depends on both how many gwei the network demands and what ETH is worth.
When do you pay an Ethereum gas fee?
You pay an Ethereum gas fee whenever you send a transaction from a wallet you control. Typical cases:
- Sending ETH or tokens from a self-custody wallet.
- Swapping tokens or providing liquidity on decentralised applications.
- Approving a token so a smart contract can use it.
- Minting or buying an NFT.
On a centralised exchange, you usually don’t see gas at all. Trades between users on the exchange happen on its internal books, and the exchange pays the network fee when you withdraw, charging you its own withdrawal fee instead.
How can you reduce gas fees?
You can reduce gas fees by choosing when and where you transact.
- Check a gas tracker. Gas trackers show the current gas price, so you can see whether now is a good moment.
- Wait for quieter periods. Off peak hours, often weekends or when the US and Europe are asleep, tend to have lower fees. Timing transactions this way costs nothing.
- Use a layer 2. Layer 2 networks bundle many transactions and settle them on Ethereum, usually at a fraction of the cost.
- Check the network before you send. Sending tokens on the wrong network can mean losing them. Make sure the receiving wallet or exchange supports the exact network you’re using.
Don’t set a much lower gas limit to save money: if the limit is too low, the transaction fails and you lose the gas used anyway.
Gas fees on crypto exchanges
On crypto exchanges, network costs are folded into the withdrawal fee. That fee can be higher or lower than the actual gas cost: some exchanges charge a flat amount, and some batch many withdrawals together, which lowers the cost per user. Check the provider’s fee schedule, for example our breakdown of Kraken fees, before you move coins.
For EU residents, use an exchange with a MiCA licence. Licensed providers must publish their fees clearly. Since 30 December 2024, withdrawals of more than €1,000 to your own wallet also need a quick check that the wallet is yours under the EU travel rule.
Gas fees on other networks
Gas fees are an integral part of Ethereum and every network built on the same technology, including Ethereum layer 2s and other EVM chains, each charging gas in its own native token. Other blockchains use different fee structures: Bitcoin charges a transaction fee based on the size of your transaction, and the XRP Ledger charges a tiny fee in XRP that is destroyed rather than paid to anyone. Whatever the network, you need some of its native token to pay.
Related terms
Questions people ask
Why are gas fees so high?
Gas fees rise when many people want to use the network at the same time. Block space is limited, so users bid against each other with higher priority fees, and the base fee climbs automatically when blocks are full.
Who pays the gas fee?
The person who sends the transaction pays the gas fee, from the wallet that signs it. On a centralised exchange, the exchange pays the network fee for withdrawals and charges you its own withdrawal fee instead.
How much ETH do I need for gas fees?
It depends on what you do and how busy the network is. A plain ETH transfer uses 21,000 gas units, while swaps and other smart contract actions use far more. Keep a small ETH buffer in your wallet, and check the estimate before you confirm.
What does insufficient gas mean on Base?
It means your wallet doesn't have enough ETH on the Base network to pay the gas fee. Base is an Ethereum layer 2 that also charges gas in ETH, so you need some ETH on Base itself, not only on Ethereum's main chain.
What crypto has the lowest gas fees?
Layer 2 networks and several other blockchains usually charge far less than Ethereum's main chain, often a fraction of a euro per transaction. Fees change with demand, so compare them at the moment you transact.