How Ethereum Gas Fees Work
When transferring ETH or ERC-20 tokens through a wallet, you'll encounter transaction fees. But how are these fees calculated? Let's dive into Ethereum's Gas mechanism.
Key Concept:
Ethereum transactions don't directly consume ETH—they burn Gas. Think of Gas as the fuel that powers the network, similar to how gasoline fuels a car.
Ethereum Fee Formula
Transaction Fee (ETH) = Gas Price × Gas Used
Example Breakdown:
- Gas Price: 5 Gwei (0.000000005 ETH)
- Gas Used: 24,876
- Calculation:
0.000000005 ETH × 24,876 = 0.00012438 ETH
ETH Unit Conversions
1 ETH = 10⁹ Gwei (1,000,000,000) = 10¹⁸ Wei
👉 Master Ethereum units with this easy guide
Factors Affecting Gas Costs
1. Gas Price (Priority Fee)
- Dynamic Pricing: Users set their Gas Price (measured in Gwei).
Speed Impact: Higher prices = faster confirmation:
- 4 Gwei: ~0.6 min wait
- 20 Gwei: ~0.2 min wait
- Wallet Defaults: Most wallets (like imToken) suggest 5–100 Gwei for reliability.
2. Gas Used
- Base Fee: 21,000 Gas for standard transfers.
- Extra Costs: Adding memos ("刻字") increases Gas Used (e.g., +3,876 Gas for text).
- Content Length: Longer memos = higher Gas consumption.
Gas Limit: Your Safety Net
- Purpose: Caps maximum Gas a transaction can use (e.g., 60,000).
Why It Matters:
- Prevents infinite loops in smart contracts.
- Too Low? Transactions fail if below 21,000.
- Pro Tip: Wallets auto-set limits—rarely need manual adjustment.
3 Money-Saving Tips
- Time Your Transactions: Avoid peak hours when network congestion raises Gas Prices.
- Use Layer-2 Solutions: Explore scaling networks like Arbitrum or Polygon.
- Batch Transactions: Combine operations to reduce total fees.
👉 Discover wallet tools to optimize Gas fees
FAQ: Ethereum Gas Explained
Q1: Why do Gas Prices fluctuate?
A1: Demand determines prices—more users = higher competition for block space.
Q2: Can I recover Gas if a transaction fails?
A2: Yes! Unused Gas (difference between Limit and Used) is refunded.
Q3: How do memos increase fees?
A3: Extra data requires more computational work, raising Gas Used.
Q4: What’s the cheapest Gas Price?
A4: Check real-time trackers like ETH Gas Station; sub-5 Gwei often works during low traffic.
Q5: Are ERC-20 transfers more expensive?
A5: Yes—they involve smart contracts, typically costing ~50,000–100,000 Gas.
Final Note: Always verify Gas settings before sending. For high-value transfers, paying slightly higher Gas ensures faster confirmations and peace of mind.
Disclaimer: This content is educational only and not financial advice. Cryptocurrency investments carry risks.