Every action on a blockchain — sending tokens, interacting with a smart contract, minting an NFT — requires computational resources. Gas fees are the mechanism that ensures those resources are compensated and that the network isn't spammed with free transactions.
A gas fee has two main components:
Gas Limit: The maximum amount of gas units you're willing to spend. A simple ETH transfer uses 21,000 gas units. More complex operations (like swapping tokens on a DEX) can use 100,000–300,000+.
Gas Price: How much you pay per gas unit, measured in gwei (1 gwei = 0.000000001 ETH).
Total Fee = Gas Limit × Gas Price (in gwei) × 0.000000001 ETH/gwei
Since August 2021, Ethereum uses a two-part fee structure:
Base Fee: Set by the protocol, adjusts automatically based on network demand. This portion is burned (permanently removed from supply).
Priority Fee (Tip): Optional tip to validators to prioritize your transaction.
Gas prices fluctuate based on simple supply and demand:
Block space is limited: Ethereum targets ~15 million gas per block
High-demand events: NFT mints, popular token launches, or airdrop claims can spike fees to 100+ gwei
Time of day: Fees are typically lower during Asian and European nighttime hours
Use Layer 2s: Arbitrum, Optimism, and Base offer 10–100x lower fees
Time your transactions: Use tools like Gas Now or Etherscan Gas Tracker to find low-fee windows
Batch transactions: Some wallets and protocols support batching multiple operations
Set appropriate gas limits: Don't overpay by setting unnecessarily high limits
Use our Gas Fee Calculator to estimate your transaction costs across different networks.
Originally published at https://theonchaindiary.com/articles/understanding-gas-fees/. More Web3 security guides and risk-scoring tools at Onchain Diary.