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What are gas fees?

Gas fees

Ethereum is the most utilised blockchain for dApps. Ether, the platform’s native currency, is the second largest crypto in terms of market capitalisation. Ethereum is an open-source blockchain network that allows for the creation and execution of transactions and smart contracts. Ethereum is powered by ether. Logging transactions within the framework requires computational power. This computational power is referred to as gas, in that it powers the network like gas in a car, and the associated costs are referred to as gas fees.


Gas is the computational power required to process a transaction or contract. Gas fees mean the financial charge associated with computations. Gas fees are denominated in gwei, a fractional percentage of ether. 1 gwei is equal to 0.000000001 ether. 

Denominations of ether

Gas fees explained 

Gas is the fee you pay to use the Ethereum network. When you submit a request on Ethereum, you are competing with all other submitted transactions for a miner to validate your request and be included in the current blockchain. 

There is a limit to the number of transactions per block, currently the equivalent to 12.5 million units of gas, and once reached the block is closed. New blocks are created approximately every 13 seconds. 

It’s a classic example of the supply and demand economic model, where there is a finite supply and fluctuating demand. When you submit a request, the transaction enters a virtual holding area and remains in transition until verified by a miner. 

The higher the gas limit you set, the faster your transaction will be verified and included in the blockchain. If your limit is set too low, your request can remain in limbo indefinitely.  

Ethereum gas fees tracker

How are gas fees calculated? 

When users send a transaction request to the Ethereum network, they include the gas price they would like to pay. Miners, the decentralised network of computers that process transactions, are free to pick and choose which transactions they process first. 

Naturally, they will give priority to requests with higher gas fees. As the number of transaction requests increases the crypto gas fees that need to be offered to get a transaction completed also increase. 

Users can send a request with low gas if cost is their biggest concern. If a quick turnaround is a priority, they can adjust their gas limit higher. Users can set their gas limits to slow, average or fast when submitting transaction requests. Gas limits can also be set manually through the advanced features mode if exact limits are desired. 

It may be that gas fees will become more standardised as the Ethereum network evolves to a proof-of-stake model and miners are no longer required. Until that time, understanding the mechanics of gas fees is critical to efficiently use Ethereum.

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