Everything you need to know about Gas

· 3 min read
Everything you need to know about Gas
A gas fee is a payment made by a user to perform any function on the Ethereum blockchain.

A gas fee is a payment made by a user to perform any function on the Ethereum blockchain. In life, nothing's free! Whether getting banking updates on your mobile phone or withdrawing as little as $10 from the ATM. Using a service will cost you a sum. The Ethereum network works on a similar principle. Just like you have to pay a charge to use the bank's ATM service, you have to pay a gas fee to perform a transaction on the Ethereum network.

You may wonder what is it that you are really paying for? Gas is the unit of measurement for the amount of computational effort required to carry out specific operations on the Ethereum network. Therefore, the fee required to complete an Ethereum transaction is Gas.

Every transaction on the Ethereum network requires computational resources, and therefore each transaction requires a fee.

Understanding "Gas" or "Gas Fee"?

The gas fee is the payment made to complete a blockchain transaction.

  • It is paid to compensate a blockchain miner for the computing power required to verify a transaction on the blockchain.
  • Typically, miners are compensated in the native cryptocurrency of the blockchain.
  • While paying for Gas is unavoidable (you can't conduct blockchain transactions without it).
  • The gas price is highly volatile and dependent on various factors.

How is Ethereum Gas calculated?

To understand how Ethereum gas is calculated, we must first understand the concept of gwei. Gwei is a tiny denomination of Ether (1 gwei = 0.000000001 ETH) that is used to measure the cost of Gas. So, for example, a gas fee of 30 gwei would be equivalent to 0.000000030 ETH.

Ethereum gas fee follows a simple calculation:

Total Gas Fee = Gas units (limit) x (Base fee + Tip)

Gas Limit: A gas limit is a maximum amount of Gas (or energy) a cryptocurrency user is willing to pay to complete a blockchain transaction. Most wallets and exchanges set the gas limit for standard Ethereum transactions at 21,000 gwei, but users can manually change this number at any time. Users frequently raise their gas limits significantly during gas wars, where many compete for transaction priority in the next block.

However, Ethereum will only use the Gas required to complete the transaction. The difference between your gas limit and the amount of necessary gwei is refunded to your wallet. Meanwhile, setting your gas limit too low will almost certainly result in your transaction failing, resulting in wasted gas fees that you will never be able to recoup.

Base Fee: Each block has a base fee depending on the network congestion. Each base fee is burned or discarded from Ethereum's supply circulation as a deflationary mechanism to offset the issuance of new ETH. Users are encouraged and expected to include a priority fee (tip) with each transaction to compensate miners for the fee that they would have previously received.

Towards more affordable Gas Fee

The Ethereum team has finally upgraded from a proof-of-work consensus model to a proof-of-stake model to improve scalability, security, and efficiency. This has significantly enhanced transaction throughput (Ethereum 1.0 can process around 30 transactions per second, while after the "Merge" upgrade, as many as 100,000 transactions can be processed per second). Therefore, it has also significantly reduced the gas fees by reducing the computing power required for each transaction.

Don't like paying for Gas? Here's what you can do:

Even though there is no way for you to directly decrease the impact of the gas unit,  there are specific ways to help you reduce your total fee by lowering the base fee and tip.

  • Select a low congestion time for your transaction: The easiest way to lower your gas fee is by selecting a time when the base fee is lower. The base fees directly represent the demand for using the Ethereum network. If you choose a peak demand time, you must dish out a high base fee, making the overall fee high. It's always best to choose a time when fewer people are using the blockchain. Weekends are usually the best time for that.
  • Plan your transactions in advance: If your transaction isn't urgent and you are willing to be patient, reducing your tip can be a great way to spend less on Gas. Reducing the "tip" or the "priority fee" will lower the overall Gas Fee cost. Remember that the tip, also known as the priority fee, is an added cost paid to miners in exchange for a faster transaction time.


In conclusion, Gas fees are an integral part of the Ethereum blockchain network. The Gas fee is the payment made to complete a blockchain transaction, compensating miners for their computational resources. Understanding the calculation of Gas units, Gas limit, and base fee can help reduce the overall Gas fee cost. With the recent upgrade to a proof-of-stake model, Ethereum has significantly enhanced transaction throughput and reduced gas fees. While Gas fees may seem like an inconvenience, they are necessary to maintain the integrity of the network and provide security to users.