Crypto Definitions

What Are Gas Fees in Crypto and Why Does Ethereum Gas Change?

By Ben Simpson, Founder of Collective Shift. Reviewed by Matt Willemsen, Director of Research. Updated 5 November 2026.

Collective Shift guide cover: What are gas fees?

Short answer: Gas is the fee you pay to have a transaction processed on a blockchain such as Ethereum. Every action uses a set amount of gas units, and the price per unit rises and falls with demand for block space. On Ethereum the fee has a base fee, which is burned, plus an optional tip that goes to the validator.

Key points

Gas measures the computing work a transaction needs.
Your fee is the gas used multiplied by the price per unit, quoted in gwei.
The base fee is burned and the priority fee, or tip, goes to the validator.
Layer 2 networks process transactions far more cheaply and settle to Ethereum.

How gas fees are calculated

A simple ETH transfer uses 21,000 gas units, while a token swap or NFT mint uses more. The price per unit is quoted in gwei, a billionth of one ether. Your wallet estimates both and shows the total before you confirm. If a transaction runs out of gas, it fails and the gas used is still spent.

Base fee vs priority fee

Part of the fee	What it does	Where it goes
Base fee	Set by the network from how full recent blocks were	Burned, removed from supply
Priority fee	An optional tip to get included faster	Paid to the validator
Max fee	The most you agree to pay per unit	Unused amount is refunded

Why ETH gas fees change

Each block has limited space. When many people want to transact at once, such as during a market rush or a popular token launch, the base fee rises block by block until demand eases. In quiet periods it falls. That is why the same transaction can cost very different amounts at different times.

How to pay less gas

Transact when the network is quieter, often checked on a gas tracker.
Use a layer 2 network for smaller, frequent transactions.
Avoid setting a high priority fee unless speed matters.
Batch actions where an app allows it.

Our guide to Ethereum layer 2 solutions explains how these networks reduce costs.

Gas on other blockchains

Most smart contract blockchains charge a similar fee, though names and amounts differ. Bitcoin calls it a transaction fee and prices it by the data size of the transaction. Some newer networks have much lower fees by design, with different trade offs in decentralisation.

Frequently asked questions

Why did my transaction fail but still cost gas?

The network still did the work up to the point it failed, so the gas used is paid even though nothing changed.

What is gwei?

Gwei is a small unit of ether, one billionth of one ETH, used to quote gas prices.

Are gas fees refundable?

No. Once a transaction is processed the gas is spent, although any unused amount below your maximum is refunded.

Do exchanges charge gas?

When you withdraw crypto from an exchange, it usually passes on a network fee, which can differ from the live gas price.

This guide is general education only and is not personal financial advice. Collective Shift Pty Ltd, ABN 78 650 977 325.

Written by Ben Simpson, Founder of Collective Shift, and reviewed by Matt Willemsen, Director of Research. Published 5 November 2026. Updated 5 November 2026.