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Crypto and DeFi

Gas fee

The payment made to have a transaction included and executed on a blockchain, priced by demand for block space.

Gas measures computational work. A simple transfer costs little; a complex DeFi interaction touching several contracts costs much more, and the total fee is that work multiplied by a price per unit that floats with congestion.

On Ethereum the fee has two parts since 2021: a base fee that is burned, removing ether from supply, and a priority tip that goes to the validator. Heavy network use therefore reduces the total supply of ether.

Fees make small transactions uneconomic at the wrong moment. A twenty-dollar swap during congestion can cost more in gas than the trade is worth, which is the practical reason most retail activity has moved to layer-two networks.

Also known as: gas · transaction fee · gwei · base fee

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Educational definition. It is not investment advice and not a recommendation about any particular instrument.