Gas is the unit that measures computational effort on Ethereum. Every action on the blockchain — whether a simple ETH transfer, a token swap, or an NFT mint — costs gas. You pay the gas fee in ETH, and it goes to the validators who process your transaction.

Gas fees are a common pain point for Ethereum users. During peak times, even simple transactions can cost over $50. But if you understand how gas works, you can save strategically.

The Basics: Gas, Gas Limit, and Gwei

Gas is the unit measuring a transaction's computational cost. A simple ETH transfer always costs 21,000 gas. A Uniswap swap costs ~150,000 gas. A complex smart contract call can exceed 500,000 gas.

Gas Limit is the maximum gas you're willing to provide for a transaction. If less gas is used, you get the remainder back. If the limit is exceeded, the transaction fails — and you lose the fee anyway.

Gwei is a sub-unit of ETH. 1 Gwei = 0.000000001 ETH (10⁻⁹). The gas fee is quoted in Gwei per gas unit. If the gas price is 20 Gwei, a simple transfer costs: 21,000 × 20 Gwei = 420,000 Gwei = 0.00042 ETH.

EIP-1559: How Gas Fees Are Calculated

Since August 2021 (London Upgrade), Ethereum uses the EIP-1559 system with two components:

Base Fee: A base fee automatically set by the network. It rises when blocks are more than 50% full and falls when they're less than 50% full. The base fee is burned — it goes to nobody but is removed from circulation. This makes ETH deflationary when demand is high.

Priority Fee (Tip): A voluntary tip you pay to the validator. The higher the tip, the faster your transaction is processed. At normal network load, 1–2 Gwei is often sufficient.

Total fee = (Base Fee + Priority Fee) × Gas used.

How to Save on Gas

Use timing: Gas prices fluctuate significantly by time of day and day of week. Weekends and late evening hours (US Eastern time) are often cheaper, as fewer users are active.

Use Layer 2: Networks like Arbitrum, Optimism, and Base offer the same features as Ethereum Mainnet at a fraction of the cost. A swap on Arbitrum often costs under $0.10. Send your ETH via a bridge or buy directly on L2.

Don't manually lower the gas limit. Your wallet estimates the gas limit automatically. If you set it too low, the transaction fails and you lose the fee anyway. Leave the gas limit alone.

Batch transactions: Some protocols allow combining multiple actions into one transaction. This saves gas because you only pay the base cost once.

Minimize ERC-20 approvals: Every token approval costs gas. Some dApps request "unlimited approval" — this saves gas on future transactions but carries security risks.

Gas Prices: Layer 2 vs. Mainnet

Layer 2 networks (rollups) bundle many transactions and write them as compressed data to Ethereum Mainnet. This makes them dramatically cheaper:

Ethereum Mainnet: Simple transfer ~$1–5, Swap ~$5–30, NFT mint ~$10–50 (at average load)

Arbitrum / Optimism: Simple transfer ~$0.01–0.10, Swap ~$0.05–0.30

Base: Often even cheaper, benefiting from blob transactions (EIP-4844 "Dencun").

For most everyday transactions, Layer 2 is the better choice. Ethereum Mainnet is worth it mainly for large amounts where L1 chain security matters more than costs.

What Happens with "Out of Gas"?

If your transaction uses more gas than your gas limit allows, it gets reverted — but the gas fee is still gone. This is one of Ethereum's most frustrating aspects for newcomers.

Why? Because the validators already spent the computational effort. The transaction was processed, even though it failed. That's why: leave the gas limit at the wallet's suggested value or increase it slightly — but never manually lower it.

FAQ

Why are gas fees sometimes so high?

Ethereum has limited block space. When many users send transactions simultaneously (e.g., during NFT drops or market crashes), they outbid each other with higher tips. The base fee rises automatically when blocks are consistently full.

Can I set the gas fee to 0?

No. Without a gas fee, your transaction won't be processed. You can set the priority fee to 0, but you always have to pay the base fee.

Why does gas consumption vary by action?

More complex operations require more computation. An ETH transfer only changes two account balances. A Uniswap swap calculates prices, moves tokens, updates liquidity pools, and more.

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