Gas Fee is a commonly used term in cryptocurrency, referring to the fee paid by users to network validators whenever they want to execute a function on a blockchain. On the Ethereum blockchain, gas fees represent the cost required to execute transactions on the network.
Since these fees are paid to miners, Gas Fee is also known as "miner fees" in Chinese.
Most blockchain activities today—such as cryptocurrency transfers, NFT trading, and more—require payment of Gas Fees. Therefore, understanding what Gas Fees are and how to check and calculate them is essential.
Latest News and Updates on Ethereum Gas Fees
According to Etherscan data from April 28, Ethereum network Gas Fees have dropped to $1.12 per transaction, with a minimum of 5 Gwei, reaching a six-month low.
What Is Gas Fee?
Gas Fee refers to the fee paid by blockchain protocol users to network validators whenever they wish to execute a function on the blockchain. This fee incentivizes network validators (miners) to accurately record transactions and maintain the protocol honestly.
Initially, Gas Fee was mainly associated with Ethereum (ETH). However, with the emergence of more blockchain platforms, Gas Fee is no longer exclusive to Ethereum transactions. In this article, we focus on Ethereum Gas Fees.
Note that different blockchains use different tokens to pay Gas Fees—Ethereum uses ETH, while Binance Smart Chain uses BNB.
Why Do Gas Fees Exist?
Gas Fees represent the cost required to execute transactions on the network. So, why do Gas Fees exist, and what is their purpose?
Any activity executed directly on the blockchain—whether executing a smart contract, buying an NFT, or other operations—requires computational power to process and complete.
Network validators (miners) are decentralized individuals who run specialized programs to verify blockchain transactions, providing this computational power. Miners purchase, operate, and maintain their equipment to ensure blockchain security and accuracy.
Gas Fees play a crucial role by transferring value from those needing blockchain services to those providing the computational power required to execute those services. They incentivize miners to process transactions accurately and maintain blockchain security.
Below, we explain Ethereum Gas Fees in detail.
The Role of Gas Fees in Ethereum
Ethereum Gas Fees are the transaction costs required to complete operations on the Ethereum blockchain. Each transaction contains data in a block. Since blocks can only process a limited amount of data, miners must prioritize which transactions they process first.
As a decentralized blockchain, Ethereum relies on servers/computers worldwide to provide the computational power needed to complete transactions. Thus, costs fluctuate based on supply and demand.
Miners provide the necessary computational power for the Ethereum blockchain and set Gas Fee prices based on operational costs. The more data a transaction contains, the higher the Gas Fee, as it requires more computational power.
Gas Fees enhance transaction security. While low Gas Fees mean cheaper costs for users, they also mean lower security, as external actors may manipulate the blockchain more easily.
Overall, Gas Fees compensate miners for maintaining and securing the blockchain—hence why they are also called "miner fees."
Note: Since Ethereum's transition from Proof of Work (POW) to Proof of Stake (POS) in September 2022, Gas Fees now serve as rewards for staking ETH and participating in validation—users who stake more ETH earn higher rewards.
Gas Fee Calculation: Factors Affecting Gas Prices
Gas Fees are based on the economic principles of supply and demand.
In blockchain terms:
- Supply: The total computational power of network validators.
- Demand: The total computational power required to execute transactions submitted by users.
Gas Prices aim to maximize profits for validators/miners. Users willing to pay higher fees get faster transaction processing.
Gas Fees update in real-time based on network demand. Users can manually adjust fee quotes to choose between faster (but more expensive) or slower (but cheaper) settlements.
Before Ethereum's London Upgrade (August 2021), Gas Fees were calculated using:
- Gas Price: The price users choose to pay per unit of Gas.
- Gas Limit: The maximum Gas a user sets for a transaction.
Multiply these two:
Gas Price × Gas Limit = Maximum Gas Fee
After EIP-1559, Gas Fees follow a new formula:
Gas Limit × (Base Fee + Priority Fee (Tip))
Now, Ethereum automatically adjusts the Base Fee per block based on demand. Users must pay this minimum fee, which is burned (removed from circulation). They can also add a Priority Fee (Tip) for faster processing.
If users set too high a Gas Limit, the network refunds the difference after execution.
Ethereum Gas Fees are paid in GWEI (1 GWEI = 0.000000001 ETH).
Tools to Track Gas Fees
Websites like Etherscan Gas Tracker allow users to check real-time Gas prices to estimate transaction costs.
The minimum Gas Limit for Ethereum transactions is 21,000 GWEI. Transactions with insufficient Gas fail, but validators still charge fees.
Why Are Ethereum Gas Fees So High?
Due to Ethereum's complexity, Gas Fees are often higher than those on other blockchains—a major point of criticism.
Several factors contribute to high Gas Fees:
- High Demand: More users and transactions mean greater competition for block space.
- NFT Projects: Popular NFT projects (e.g., CryptoKitties, Otherdeed) have driven Gas Fees to extreme levels—sometimes exceeding $10,000 per transaction.
- Network Congestion: Sudden spikes in activity cause delays, making users question whether their transactions will process.
How Do ETH Gas Fees Work?
To illustrate, let’s say you want to buy ETH:
- Initiate a Transaction: On an exchange/platform, enter purchase details.
- Approve Gas Estimate: The platform suggests a Gas Fee based on current rates.
- Send to Ethereum Blockchain: Your order is broadcasted with a Gas Limit cap.
- Validators Build a Block: Validators prioritize high-fee transactions for inclusion.
- Wallet Updates: Once confirmed, your ETH balance updates, and Gas Fees deduct.
- Validators Earn Fees: Validators receive the Priority Fee; the Base Fee is burned.
How to Check Gas Fee Prices?
Use these Gas Fee trackers:
- Etherscan
- ETH Gas Station
- GasNow
Many crypto platforms also offer built-in Gas monitors showing slow/medium/fast transaction fees.
How to Minimize Gas Fees and Save Money?
Follow these tips to reduce Gas costs:
1. Choose the Right Time
Gas Fees peak during high-traffic periods (9 PM–2 PM UTC). Weekends are usually cheaper.
2. Use Ethereum Scaling Solutions
- Polygon (MATIC): A cost-effective Layer 2 solution for faster, cheaper transactions.
Why Doesn’t Bitcoin Have Gas Fees?
Bitcoin and Ethereum both face congestion, but their solutions differ:
- Bitcoin: Uses Lightning Network (Layer 2) for faster, cheaper transactions.
- Ethereum: Plans to reduce fees via Ethereum 2.0 upgrades.
Conclusion
In summary:
- Gas Fees reward miners and secure blockchain networks.
- Ethereum is upgrading to reduce fees (e.g., POS transition).
- Monitor Gas Fees using trackers and optimize transaction timing.
- Consider Layer 2 solutions like Polygon for cheaper alternatives.
👉 Learn more about Ethereum Gas optimization
👉 Discover how Layer 2 scaling works
FAQs
Q1: What happens if my Gas Limit is too low?
A: Transactions fail, but Gas Fees are still charged.
Q2: Can I cancel a pending Ethereum transaction?
A: No—once submitted, transactions cannot be canceled unless replaced by a higher-fee one.
Q3: Why are Gas Fees higher during NFT drops?
A: High demand for block space drives competition, increasing fees.
Q4: How do I estimate Gas Fees before sending ETH?
A: Use tools like Etherscan Gas Tracker for real-time estimates.
Q5: Will Ethereum 2.0 reduce Gas Fees permanently?
A: Yes, upgrades aim to lower fees and improve scalability long-term.