Gas
In simple terms
Gas is the cost you pay to perform actions on a blockchain network, similar to paying a fee when you make a bank transfer. The busier the network, the higher the fee you need to pay to get your transaction processed quickly.
Definition
The fee required to process a transaction on a blockchain like Ethereum.
In depth
Gas represents the computational work required for validators to execute and record a transaction on a blockchain. Each operation (transfer, smart contract execution, data storage) consumes a specific amount of gas units, and users bid a gas price (in gwei or native tokens) to incentivize validators to include their transaction in the next block. The total fee equals gas units multiplied by the gas price offered, creating a market mechanism where network congestion increases competition and raises prices, while simple transactions cost less than complex smart contract interactions.
How does Gas work?
Gas measures the computational work a blockchain transaction requires. Every operation carries a fixed cost in gas units, so a simple Ethereum transfer costs 21,000 while contract calls cost far more. The sender sets a gas limit, the maximum units they will pay for, and a price per unit. Since Ethereum's 2021 fee change, that price has two parts: a base fee the protocol sets from how full recent blocks were, which is destroyed, and a priority tip paid to the validator. The charge is gas used times base fee plus tip. A transaction that runs out of gas fails and still costs what it consumed.
An example
Someone sends a token transfer that consumes 50,000 gas. Using illustrative figures, the base fee is 20 gwei and they add a 2 gwei tip, making 22 gwei per unit. Total cost is 50,000 multiplied by 22, or 1,100,000 gwei, which equals 0.0011 ETH. The base fee portion is destroyed and the tip goes to the validator. When blocks are full the same transfer can cost several times more.
Figures are illustrative only.
What beginners get wrong
- Setting a gas limit too low causes the transaction to run out partway, fail, and still consume the gas it burned getting there.
- A failed transaction is not free, because the network charges for the computation performed even when the intended action never completed.
- Submitting during a congestion spike instead of waiting, when the identical action often costs considerably less once demand for block space falls.
- Holding only tokens and no native coin leaves a wallet unable to move anything, since gas on Ethereum must be paid in ETH.
Related terms
Part of
What is cryptocurrency, and how does it work? — the subject page for cryptocurrency basics, with all 23 of its definitions in one place.
Educational only — not financial advice.