What is Gas Fee?
Last reviewed 2026-05-03
First defined in: Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform (Buterin, 2013) and Ethereum: A Secure Decentralised Generalised Transaction Ledger (Wood, 2014) (2014) by Vitalik Buterin et al.
The gas fee is the ETH paid to include a transaction in a block: gas used × gas price. After EIP-1559, gas price = base fee (burned) + priority fee (tip to validator). Post-EIP-4844 (March 2024), L2 fees collapsed by 10-100×.
How it works
Every operation the EVM executes — arithmetic, storage writes, contract calls — has a fixed cost in gas units, so a transaction's gas usage measures the computation and storage it consumes. A simple ETH transfer costs 21,000 gas; complex DeFi interactions can use hundreds of thousands.
When you submit a transaction, your wallet estimates the gas needed and sets a gas limit. Under EIP-1559 you also set two prices: a max fee and a priority fee. The protocol itself sets the base fee each block by algorithm — if the previous block was more than half full, it rises (up to 12.5% per block); if less, it falls. This makes fees track demand automatically.
When a validator includes your transaction, you pay gas used × (base fee + priority fee). The base fee portion is burned, removing ETH from supply; the priority fee tips the validator to prioritize you; anything above the actual cost, up to your max fee, is refunded. On rollups you pay a second component covering the cost of posting your data to the L1, which is why L2 fees move with L1 conditions.
Why it matters
Gas fees gate participation. EIP-1559 made fees predictable; EIP-4844 made L2 fees almost free. The economic gating mechanism for Ethereum block space.
Real-world examples
Pre-EIP-1559: first-price auctions causing fee volatility. Post-EIP-1559 (Aug 2021): base fee + tip. Post-EIP-4844 (Mar 2024): L2 fees collapsed 10-100x.
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Browse GlossaryFrequently asked questions
What is the formula for calculating gas fee on Ethereum?
The gas fee is calculated as gas used multiplied by gas price; after EIP-1559, gas price equals base fee (burned) plus priority fee (tip to validator).
How did EIP-4844 affect Layer 2 fees?
Post-EIP-4844 (March 2024), L2 fees collapsed by 10-100×.
What happens to the base fee portion of a transaction under EIP-1559?
The base fee portion is burned, removing ETH from supply.