Ethereum Gas Fees: Everything you need to know

All transactions processed on the Ethereum blockchain require a transaction fee, called “gas.” These gas fees are essential in that they prevent users from spamming the network with frivolous transactions, and are also used to pay the people (called validators) who check and record transactions on the blockchain.

Gas fees can be surprisingly expensive at times, and we’ve put together this guide to explain why this happens, along with every other detail anyone would ever need to know about how fees are calculated on Ethereum.

Ethereum Gas Fundamentals

Performing any function on the Ethereum blockchain will cost you some gas. The gas fee is priced in Ether (ETH), the native cryptocurrency of the Ethereum blockchain and, like cents to U.S. dollars, Ether are often broken down into “wei” or “gwei.”

one wei is one quintillionth (18 zeros) of one ETH
one gwei is one billionth of one ETH
wei and gwei are the two most commonly-used denominations of ETH.

ETH Denominations:

Unit Name	Alt Name	Wei Value	Number of Wei
Wei	wei	1 wei	1
Kwei	babbage	1e3 wei	1,000
Mwei	lovelace	1e6 wei	1,000,000
Gwei	shannon	1e9 wei	1,000,000,000
Twei	szabo	1e12 wei	1,000,000,000,000
Pwei	finney	1e15 wei	1,000,000,000,000,000
Ether	buterin	1e18 wei	1,000,000,000,000,000,000

Alternate unit names are based on influential people in cryptography and cryptocurrency:

Wei: For Wei Dai, who formulated the concepts of all modern cryptocurrencies—best known as the creator of the predecessor to Bitcoin, B-money.
Babbage: For Charles Babbage, a mathematician, philosopher, inventor, and mechanical engineer—designed the first automatic computing engines.
Lovelace: For Ada Lovelace, mathematician, writer, and computer programmer—she wrote and published the first algorithm.
Shannon: For Claude Shannon, an American mathematician, cryptographer, and crypto-analysis guru—also known as “the father of information theory.”
Szabo: For Nick Szabo, a computer scientist, legal scholar, and cryptographer—known for his pioneering research in digital contracts and digital currency.
Finney: For Hal Finney, a computer scientist and cryptographer—he was one of the early developers of Bitcoin, and alleged to be the first human to receive a bitcoin from Satoshi Nakamoto, the named founder of Bitcoin.
Buterin: For Vitalik Buterin, the creator of Ethereum.

Components of Gas Fees

Gas fees can be broken down into two main parts: gas limit and gas price.

The gas limit is the maximum amount of computational work you’re willing to pay for. Different actions need different amounts of gas:

Sending ETH to someone else needs about 21,000 gas units
Trading tokens might need 65,000 gas units
Buying an NFT could need 200,000 gas units or more

The gas price is how much you pay for each unit of gas, measured in “gwei” (a tiny fraction of ETH). One gwei equals 0.000000001 ETH.

To calculate the total gas fee, multiply the gas limit by the gas price:

Total Gas Fee = Gas Limit × Gas Price

For example, if you set a gas limit of 21,000 units and a gas price of 30 gwei, your fee would be: 21,000 × 30 gwei = 630,000 gwei = 0.00063 ETH

EIP-1559 Fee Market Structure

In August 2021, Ethereum changed how gas fees work with an update called EIP-1559. This created a new fee system with three parts:

Base fee: This is set by the network automatically based on how busy it is. When more people want to use Ethereum, the base fee goes up. When fewer people are using it, the base fee goes down. The important thing about the base fee is that it gets destroyed (or “burned”) rather than paid to validators.
Priority fee (or tip): This is an optional extra payment that goes to validators. If you want your transaction to be processed faster, you can add a bigger tip.
Max fee: This is the most you’re willing to pay in total (base fee + priority fee). If the actual cost ends up being less than your max fee, you get the difference back.

The fee burning mechanism is important because it reduces the total supply of ETH over time. When network activity is high, more ETH gets burned than created, which can make ETH more valuable.

Factors Influencing Gas Fees

Network Demand and Congestion

The biggest factor affecting gas fees is how many people are trying to use Ethereum at the same time. Ethereum can only process about 15-30 transactions per second. When more people want to make transactions, they compete by offering higher gas prices.

This leads to predictable patterns:

Weekdays often have higher fees than weekends
Fees are usually higher during business hours in the US and Europe
When popular NFT projects launch or big news happens in crypto, fees can spike suddenly

For example, when the Bored Ape Yacht Club NFT collection launched, gas prices increased to over 1,000 gwei, making even simple ETH transfers cost over $50!

Transaction Complexity

More complex transactions need more gas because they require more computational work from the network. Here’s a rough guide:

Simple ETH transfer: 21,000 gas
ERC-20 token transfer: 65,000 gas
NFT minting: 150,000-300,000 gas
Complex smart contract interactions (like lending on Aave): 150,000-500,000 gas
Deploying a new smart contract: 1,000,000+ gas

If you’re using decentralized apps (dApps), they usually tell you how much gas you’ll need, but it’s good to understand these differences.

User-defined Settings

You can control your gas fees by adjusting:

Gas limit: Set this high enough to complete your transaction. If you set it too low, your transaction will fail, and you’ll still pay for the gas used before it failed.
Priority fee: Higher tips mean faster processing. For non-urgent transactions, lower tips can save money.
Max fee: This protects you from paying too much if gas prices spike suddenly.

Most wallet apps like MetaMask suggest appropriate settings, but you can adjust them manually if you want.

DeFi and NFT Market Activities

Decentralized finance (DeFi) apps and NFT markets have a huge impact on gas fees. When a new farming opportunity appears in DeFi or a popular NFT collection launches, thousands of people might try to make transactions at the same time.

Some notable examples:

The Uniswap UNI token airdrop in September 2020 caused gas prices to exceed 500 gwei
The Otherside virtual land sale by Yuga Labs in April 2022 caused gas prices to reach 8,000 gwei, with users spending over $180 million on gas fees in a single day

If you don’t need to participate in these events right away, it’s usually better to wait until gas prices return to normal.

Gas Fee Challenges and Controversies

Accessibility Issues

High gas fees create a big problem for Ethereum’s goal of being an open financial system for everyone. When fees are $50 or more per transaction, people with less money simply can’t use the network.

This is especially problematic for people in developing countries, where even a $5 fee might be unaffordable. Some users have been forced to switch to alternative blockchains with lower fees, like Polygon, Arbitrum, or Solana.

Failed Transactions

One frustrating aspect of gas fees is that you still have to pay even if your transaction fails. Common reasons for failure include:

Setting a gas limit that’s too low
Setting a max fee that’s too low as gas prices increase
Trying to buy an NFT that sells out before your transaction is processed
Smart contract errors or reverted transactions

To avoid wasting money on failed transactions, make sure to:

Use the gas limit recommended by your wallet
Check current gas prices before setting your max fee
Be extra careful when interacting with new or complex smart contracts

Block Gas Limit Debates

The Ethereum community often debates whether to increase the block gas limit. This limit determines how many transactions can fit in each block.

A higher limit means more transactions per block and potentially lower fees. However, it also means:

Validators need more powerful computers to process blocks
The blockchain grows larger faster, making it harder for people to run nodes
The network might become more centralized as fewer people can afford to run validators

In January 2025, validators approved increasing the gas limit to nearly 32 million units, up from around 30 million. This was the first major gas limit increase since 2021.

Strategies for Reducing Gas Fees

Transaction Timing Optimization

The simplest way to pay less for gas is to make transactions when the network isn’t busy:

Weekends typically have lower gas prices than weekdays
Early mornings and late evenings (US time) often have lower fees
Avoid times when major NFT projects are launching or big announcements happen

Tools like Etherscan Gas Tracker or Gas Now show current gas prices and help you find cheaper times.

Transaction Batching

Instead of making many separate transactions, try to combine them into one larger transaction. For example:

Use a DEX aggregator like 1inch to swap multiple tokens in one transaction
Use multicall functions to interact with several contracts at once
If you’re a developer, design your smart contracts to allow users to perform multiple actions in one step

Batching can cut your total gas costs by 50% or more in some cases.

Gas-efficient Wallet Selection

Some wallets have better tools for managing gas fees than others:

MetaMask lets you set custom gas settings and estimates fees based on transaction speed
Rainbow offers a simple interface with good gas price suggestions
Frame Wallet includes advanced gas management features
Argent has built-in batching for certain actions

Most good wallets also allow you to cancel or speed up pending transactions by replacing them with new ones that have higher gas prices.

Gas Fee Estimation Tools

Several tools can help you plan transactions and estimate fees:

Etherscan Gas Tracker: Shows current gas prices and estimates for different transaction speeds
ETH Gas Station: Provides detailed gas analytics and predictions
MetaMask’s gas estimator: Built into the wallet for easy reference
Blocknative Gas Estimator: Offers real-time gas price predictions

These tools can help you save money by showing when gas prices are likely to be lower.

Layer 2 and Scaling Solutions

Overview of Layer 2 Technologies

Layer 2 solutions are separate systems built on top of Ethereum that handle transactions more efficiently. They process transactions off the main Ethereum chain and then post summaries back to Ethereum. This makes them much cheaper to use while still inheriting Ethereum’s security.

The main types of Layer 2 solutions are:

Optimistic rollups: These assume transactions are valid by default and only check if someone challenges them. Examples include Optimism and Arbitrum. They can reduce fees by 3-10x.
ZK-rollups: These use advanced math called zero-knowledge proofs to verify transactions. Examples include zkSync and StarkNet. They can reduce fees by 10-100x.
Validium and Plasma: These are older scaling solutions that work a bit differently. They’re less common now than rollups.

Polygon and Other Sidechains

Polygon is often called a Layer 2 solution, but technically it’s a “sidechain” - a separate blockchain that runs alongside Ethereum with its own security. Polygon has its own validators and consensus mechanism.

Benefits of Polygon:

Fees are typically less than $0.01 per transaction
Transactions confirm in seconds rather than minutes
Most popular Ethereum apps work on Polygon too

The trade-off is that sidechains don’t inherit all of Ethereum’s security guarantees, so there’s a slightly higher risk of problems.

Practical Guide to Using Layer 2

To use a Layer 2 solution, you need to:

Bridge assets: Move your ETH or tokens from Ethereum to the Layer 2 network using a bridge. This costs one Ethereum gas fee, but then you can make many cheap transactions on Layer 2.
Set up your wallet: Configure your wallet (like MetaMask) to connect to the Layer 2 network.
Use compatible apps: Many popular apps like Uniswap, Aave, and OpenSea work on Layer 2 networks.

When choosing a Layer 2, consider:

Which apps you want to use (not all are available on every Layer 2)
How much security you need
Whether your friends and communities are using it
How easy it is to move money on and off the network

Gas Optimization for Developers

Smart Contract Optimization Techniques

Developers can write smart contracts that use less gas:

Use smaller data types (uint8 instead of uint256) when possible
Pack variables together to save storage space
Use calldata instead of memory for function parameters
Avoid loops and complex calculations on-chain
Use libraries for common functions
Replace multiple state changes with a single operation

For example, optimizing a smart contract might reduce the gas needed from 100,000 units to 50,000 units, cutting fees in half for users.

Gas Tokens and Their Applications

Gas tokens are a clever way to store gas when prices are low and use it when prices are high. They work by performing gas-refunding operations like freeing up storage.

The most popular gas tokens were:

CHI (by 1inch)
GST2 (GasToken)

However, EIP-1559 made some gas token mechanisms less effective, and most aren’t widely used anymore.

Development Tools for Gas Optimization

Developers can use these tools to optimize gas usage:

Hardhat Gas Reporter: Shows gas usage per function when running tests
Remix Gas Profiler: Visual tool for seeing which parts of a contract use the most gas
solidity-optimizer: Automatically optimizes code for lower gas usage
ETH Gas Reporter: Generates reports comparing gas usage before and after changes

MEV (Maximal Extractable Value)

Understanding MEV in Ethereum

MEV (Maximal Extractable Value) is profit that validators can make by choosing the order of transactions in a block. This is important to understand because it affects gas prices and how quickly your transactions get processed.

Types of MEV include:

Arbitrage: Buying an asset in one place and selling it for more elsewhere
Liquidations: Making money from liquidating undercollateralized loans
Sandwich attacks: Placing transactions before and after a user’s transaction to profit from price movements

Each year, hundreds of millions of dollars worth of MEV is extracted from Ethereum users.

MEV’s Impact on Transaction Ordering

MEV can affect your transactions in several ways:

Frontrunning: Validators might put their transactions before yours to take advantage of an opportunity
Backrunning: Validators might put their transactions after yours to profit from changes you cause
Sandwich attacks: Your transaction might get “sandwiched” between two others, causing you to get a worse price

To protect yourself from MEV:

Use private transaction pools like Flashbots
Set a low slippage tolerance in DEX trades
Use DEX aggregators with MEV protection
Consider using protocols designed to minimize MEV

MEV in the Post-Merge Environment

After Ethereum switched to proof-of-stake (called “The Merge”), MEV extraction changed:

PBS (Proposer-Builder Separation): This separates the roles of building blocks and proposing them, making MEV extraction more transparent
MEV-boost: A system that allows validators to get MEV rewards without running complex algorithms
Block builders: Specialized entities that create blocks optimized for MEV extraction

These changes haven’t eliminated MEV, but they’ve made it more organized and predictable.

Gas Fee Economics in Proof-of-Stake

Transition from Proof-of-Work to Proof-of-Stake

In September 2022, Ethereum changed from proof-of-work (using miners with powerful computers) to proof-of-stake (using validators who deposit ETH as collateral). This change, called “The Merge,” affected gas fees in several ways:

Block times became more consistent (exactly 12 seconds), making fee estimation more predictable
The fee mechanism didn’t fundamentally change, but became more stable
The energy cost of running the network decreased by over 99%, though this didn’t directly lower gas fees

Validator Economics and Fee Accrual

Under proof-of-stake, validators earn money from:

Block rewards (new ETH created with each block)
Priority fees (tips) from transactions
MEV (as discussed earlier)

When network activity is high, priority fees and MEV can make up most of a validator’s income. This incentivizes validators to include as many transactions as possible and process them efficiently.

The relationship between staking returns (how much validators earn) and gas fees creates a balance:

Higher gas fees mean more income for validators
More validator income attracts more stakers
More stakers increase network security
Better security makes Ethereum more valuable

Recent Developments and Gas Limit Changes

January 2025 Gas Limit Increase

In January 2025, Ethereum validators approved increasing the gas limit to nearly 32 million units, with a maximum expected capacity of 36 million units. This was the first major gas limit change since 2021 and the first during the proof-of-stake era.

The process was automatic and didn’t require a hard fork (major update) because more than half of the validators voted to support the change by including a specific value in blocks they created.

The higher gas limit allows more transactions and complex operations to fit in each block, improving network throughput. This is especially important for developing sophisticated DeFi applications that need to perform multiple operations in a single transaction.

Community Response and Market Reaction

The gas limit increase received mixed responses:

Most users were happy about the potential for lower fees
Some developers worried about increased state growth and centralization pressure
The price of ETH initially rose as investors saw the change as positive for adoption

The adjustment also addressed concerns about users moving to alternative, lower-cost networks like Solana during peak times. By accommodating more transactions, Ethereum improved its competitiveness while maintaining its security advantages.

Comparing Ethereum Gas Fees with Alternative Blockchains

Fee Structures on Competing Networks

Other blockchains use different fee models that can be much cheaper than Ethereum:

Solana:

Fixed fee per signature (typically less than $0.01)
Additional fees based on compute units used
Doesn’t increase much during congestion
Much higher transaction capacity (thousands per second)

BNB Smart Chain (formerly Binance Smart Chain):

Similar model to Ethereum but with lower base fees
Typically 5-10x cheaper than Ethereum
Less decentralized than Ethereum

Avalanche:

Fee burning mechanism like Ethereum
Separate fees for different chains (X-Chain, P-Chain, C-Chain)
Usually cheaper than Ethereum but more expensive than Solana

Cross-chain Fee Comparison

Here’s a rough comparison of fees for common operations across different blockchains:

Operation	Ethereum	Layer 2 (Arbitrum)	Polygon	Solana	BNB Chain
ETH/token transfer	$0.50-$5	$0.10-$0.50	$0.01-$0.10	< $0.01	$0.10-$0.30
Token swap	$5-$50	$0.50-$2	$0.05-$0.20	$0.02-$0.05	$0.20-$1
NFT minting	$20-$200	$1-$10	$0.10-$1	$0.05-$0.10	$1-$5
Complex DeFi	$50-$500	$2-$20	$0.20-$2	$0.10-$0.50	$2-$10

These are approximate ranges that change based on network conditions. The trade-offs usually involve:

Security and decentralization (Ethereum is strongest)
Speed (Solana is fastest)
Ecosystem size (Ethereum has the most apps)
User experience (cheaper chains usually have better experiences)

Future of Ethereum Gas Fees

Upcoming Ethereum Upgrades

Ethereum has several planned upgrades that could reduce gas fees:

Proto-danksharding (EIP-4844): This introduces “blobs” of data that are cheaper to store than regular transaction data. This will mostly benefit Layer 2 solutions, making them even cheaper.
Verkle Trees: A new way to store Ethereum’s state data that makes proofs smaller and more efficient.
Execution layer optimizations: Various technical improvements to make transaction processing more efficient.

These upgrades are part of what some call “Ethereum 2.0,” though the Ethereum Foundation prefers to call it the “consensus layer and execution layer roadmap.”

Long-term Scaling Roadmap

The long-term plan for Ethereum includes:

Full sharding: Splitting the network into multiple parts (shards) that can process transactions in parallel. This could increase capacity by 100x or more.
State expiry: Moving old, unused data out of the active state to reduce the load on validators.
Stateless clients: Allowing people to validate the network without storing the entire state.

If successful, these changes could dramatically reduce gas fees while maintaining Ethereum’s security and decentralization.

Potential Fee Structure Evolutions

The Ethereum community is also discussing possible changes to the fee structure:

EIP-1559 improvements: Tweaking how the base fee adjusts to make it more stable
Alternative fee markets: New ways to price block space more efficiently
Priority lanes: Dedicated space for certain types of transactions
Fee delegation: Allowing dApps to pay fees for their users

These discussions show that Ethereum’s approach to fees continues to evolve based on real-world usage and economic research.

Tips for Reducing Gas Fees

Gas Saving Strategies

Combining multiple strategies can save you a lot of money on gas fees:

For everyday users:
- Use Layer 2 solutions like Arbitrum or Optimism
- Make transactions during off-peak hours
- Batch transactions when possible
- Use wallets with good gas management features
For DeFi users:
- Calculate whether gas costs make a transaction worthwhile
- Use DEX aggregators that optimize for gas costs
- Consider locking funds for longer periods to reduce the number of transactions
- Look for gas rebates or subsidies some protocols offer
For NFT collectors:
- Mint during off-peak hours
- Use marketplaces on Layer 2 networks
- Batch purchases when possible
- Calculate gas costs as part of your investment decision

Tools and Resources

Here are some helpful resources for managing gas fees:

Monitoring Tools:

Educational Resources:

Community Forums:

Final Thoughts

Ethereum gas fees are a complex but essential part of how the network operates. They ensure that validators are paid for their work and that network resources are used efficiently. While high gas fees have been a challenge for Ethereum adoption, many solutions are being developed and implemented.

Understanding gas fees helps you:

Save money on transactions
Plan your activities on Ethereum
Make informed decisions about which blockchain to use for different purposes
Appreciate the economic mechanisms that keep Ethereum secure and decentralized

As Ethereum continues to evolve with scaling solutions, Layer 2 networks, and protocol upgrades, gas fees will likely become less of a concern for everyday users. However, the fundamental principles of gas fees will remain an important part of Ethereum’s economic design.

Whether you’re a casual user, investor, developer, or just curious about blockchain technology, having a good grasp of gas fees helps you navigate the Ethereum ecosystem more effectively.

References

Ethereum Foundation. “Gas and Fees.” Ethereum.org. https://ethereum.org/en/developers/docs/gas/
Buterin, V. (2021). “EIP-1559: Fee market change for ETH 1.0 chain.” Ethereum Improvement Proposals. https://eips.ethereum.org/EIPS/eip-1559
Etherscan. “Ethereum Average Gas Price Chart.” Etherscan.io. https://etherscan.io/chart/gasprice
Flash, B. (2023). “Understanding Ethereum Gas Fees.” CoinDesk. https://www.coindesk.com/learn/understanding-ethereum-gas-fees/
Wackerow, P. (2022). “A guide to gas.” Ethereum.org Blog. https://ethereum.org/en/developers/docs/gas/
Hoffman, D. (2020). “The Life Cycle of an Ethereum Transaction.” Bankless. https://newsletter.banklesshq.com/
ConsenSys. (2023). “Gas Optimization Techniques.” ConsenSys Developer Documentation. https://consensys.net/
Daian, P., et al. (2020). “Flash Boys 2.0: Frontrunning, Transaction Reordering, and Consensus Instability in Decentralized Exchanges.” IEEE Symposium on Security and Privacy.
Buterin, V. (2024). “Ethereum’s Roadmap: Sharding and Beyond.” Ethereum Foundation Blog.
Ryan, D. (2023). “Layer 2 Scaling Solutions for Ethereum: A Comprehensive Guide.” Ethereum.org. https://ethereum.org/en/layer-2/