A gas fee is the cost required to perform a transaction or execute a smart contract on a blockchain network. The term originated with Ethereum but applies to most programmable blockchains.
How Gas Works
Every operation on a blockchain requires computational resources. Gas measures the amount of work needed. The total fee is calculated as: Gas Used × Gas Price. On Ethereum, gas prices are denominated in "gwei" (1 gwei = 0.000000001 ETH).
Gas Price Factors
Network Congestion: More users competing for block space drives gas prices up.
Transaction Complexity: Simple transfers cost less than complex smart contract interactions.
Priority: Users can pay higher gas to have their transactions processed faster.
Reducing Gas Costs
Use Layer 2 solutions (Arbitrum, Optimism, Base) for cheaper transactions. Time transactions during low-activity periods. Use gas tracking tools to monitor optimal pricing. Some wallets allow setting custom gas limits.