What Are Gas Fees in Crypto?

Gas fees represent the compensation paid to miners and stakers who help make blockchain network transactions possible. They compensate validators for processing transactions while sustaining blockchain's functionality by deterring spam and prioritising demand. 

By attaching a cost to each transaction, gas fees also help discourage malicious actors from spamming the network. 

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Ethereum Gas Fees Explained

To on most blockchains, you must pay a transaction fee. This varies from less than SGD 0.0001 to over SGD 100, depending on the blockchain and its current block space demand. cryptocurrency is ether (), and its denomination to pay gas fees is known as gwei. We will explore this in more detail below.

ETH gas fees are a key component of cryptocurrency transactions. Their typical uses include:

• A transactional fee to send ETH.

• To mint and buy .

• To utilise Ethereum-based and .
  

Gas fees ensure transactions are validated securely. While simple transactions like sending ETH cost less, complex operations (e.g., interacting with smart contracts) consume more gas, leading to higher costs.

Ultimately, supply and demand for the Ethereum network’s resources determine gas prices.

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When Are ETH Gas Fees Lowest? 

Ethereum gas fees tend to fluctuate based on network demand and congestion. Fees are typically lower during:

• Weekends and specific off-peak hours, when fewer transactions occur.

• Times to reduce network traffic, such as early morning URC. These typically happen on weekdays between noon and 4 p.m. Singapore time.

Gas fee calculators and gas trackers are widely used to help users calculate and plan transactions. Many wallets, such as , include built-in calculators that will automatically set the gas fee for you in real-time. Otherwise, users must manually set the gas fee to align with the current demand. 

On Ethereum, real-time gas fee trackers lets you take a wait-and-see approach to find  before submitting transactions.

How to Reduce or Avoid High Gas Fees

A few reliable ways to avoid high gas fees are timing transactions when base fees are low, using L2s, and reducing extra approvals rather than forcing everything into one transaction.

• Time your transaction during off-peak or low periods. Use a gas fee tracker to monitor the fluctuations and identify the low periods.

• Use Layer-2 technologies such as Optimism, Arbitrum, StarkNet, and Base. Processing your transactions off the main network will help keep your gas fees low.

• Leverage platform discounts. Certain apps offer rebates or discounts on gas fees to entice users.

• Use token approval systems like Permit2 for batch transactions. This will eliminate the need for separate approval transactions for every application.

Why Do Gas Fees Spike?

Ethereum gas fees can continuously spike for days when network demand exceeds the bandwidth capacity of Ethereum. When network capacity is exceeded during high-demand periods, gas fees increase to prioritise transactions. During high-activity periods in the crypto ecosystem, like spikes in Bitcoin and Ethereum usage, gas fees often rise significantly. 

Key examples include: 

• The : The surge of initial coin offerings created significant network congestion.

• DeFi Summer of 2020: The rapid growth of platforms caused demand for Ethereum transactions to skyrocket.

• Launch of the WLFI token in September 2025: This from below 1 gwei to over 100 gwei.

: Famous NFT project contributed to severe congestion in the Ethereum network, showcasing its scalability limitations. These fee spikes reflect Ethereum’s supply-demand balance and play a role in maintaining network security by deterring spam. While frustrating, these surges highlight the importance of solutions like Layer-2 scaling technologies, which process transactions more efficiently.

Who Receives Gas Fees on Ethereum?

Gas fees go to those who support and secure the Ethereum network. The gas fee payouts depend on the specific layer of Ethereum processing the transactions: 

• Execution layer (formerly referred to as Ethereum 1.0): Here, gas fee payouts go to on the Ethereum protocol. 

• (formerly known as Ethereum 2.0): With the mechanism, gas fees are distributed to validators who stake ETH to secure the network.

The merging of Ethereum’s two layers, known as The Merge, in September 2022 marked the transition to a full Proof-of-Stake model. This specific update reduced Ethereum’s energy consumption while maintaining network security and functionality. On PoS chains, security comes from staking economics and each chain’s penalty or reward model. On PoW, it comes from hash power funded by block rewards and fees. On rollups, it is inherited from Ethereum.

Gas Fee Denominations and Ether Transaction Fees

Gas fees on the are typically dominated in gwei instead of ether (ETH). It is the unit of gas used to measure the computing power required for a transaction on Ethereum. Gwei represents one billionth of an ETH. For example, the same gas fee amount can be expressed as:

• 0.000000054 ether

• 54 gwei

• 54,000,000,000 wei

Since gwei is the most practical unit for users, gas fee trackers and calculators often refer to gwei values directly. As Ethereum gas fees have risen, like dYDX, , , and have emerged to address scalability challenges. These technologies batch transactions off-chain before settling them on on-chain Ethereum’s , significantly reducing gas fees and improving transaction speeds. By leveraging these solutions, users and developers can minimise gas costs while maintaining security.

Gwei to Gas Fee Example

Since Ethereum’s London Hard Fork implementation on August 5, 2021, each Ethereum transaction pays a base fee that is burned and a priority fee (tip) to the validator. The base fee is algorithmically determined based on demand for Ethereum’s block space and is burned to reduce the circulating supply of ETH. Transactions awaiting processing are held in the mempool, where higher tips ensure prioritisation.

The priority fee, or tip fee, allows users to . For example:

• Fast: These transactions should be processed in under 30 seconds.

• Standard: A standard transaction should take less than five minutes to execute.

• Slow: For those who can wait up to 30 minutes and want to pay a cheaper gas fee, you can choose a slow transaction-based gas fee.

Since Ethereum is around 13 seconds, a fast transaction is generally executed in the first or second block. 

Checking ETH Gas Fees on Gemini 

When you withdraw ETH to an external wallet, Gemini shows a “Network fee” quote on the review screen before you confirm. This fee reflects current Ethereum gas conditions and changes with network demand.

How to preview it in SGD:

1. via FAST or PayNow.

2. Go to Transfer → Withdraw crypto → Ethereum (ETH), paste your destination address, and enter an amount.

3. On the Review step, check the Network fee. Your account can be set to display values in SGD, so the estimated fee shows in Singapore Dollars as well as ETH.

4. If you do not want to send yet, cancel at this step. You can repeat later to see an updated quote as gas changes.

Tip: If your destination wallet supports it, select an L2 network (such as Arbitrum, Optimism, or Base) in Gemini’s multichain withdrawal flow to see typically lower network fees than Ethereum mainnet. Availability varies by asset and network.

How Do Gas Fees Work on the Ethereum Network?

Ethereum gas fees are calculated using the formula: 

• (Base Fee + Tip) x Gas Limit = Total Transaction Fee

For instance, sending ETH with a base fee of 75 gwei, a tip of 5 gwei, and a gas limit of 30,000 results in:

• (75 gwei + 5 gwei) x 30,000 = 2,400,000 gwei (or .0024 ETH)
  

This amount will then be added on top of your transaction.

This calculation highlights how gas fees ensure transaction prioritisation while compensating validators and deterring spam. 

By adjusting the tip, users can control the speed and cost of their transactions in real time. The total transaction fees depend on the amount of gas needed for a transaction, which is influenced by its complexity and current network conditions. 

The Bottom Line

Ethereum gas fees play a vital role in maintaining the blockchain’s functionality and security. They incentivise validators, deter network spam, and enable smooth transaction processing. While fees can fluctuate based on the network demand, users can take steps to minimise costs by leveraging tools like gas trackers, using L2 solutions, and scheduling transactions during off-peak hours.

When you’re ready to begin your crypto journey, open an account on . Start small with a test transaction and compare gas fees across supported networks. By using a reputable and secure platform like Gemini, you will be able to trade confidently. 

Gemini Digital Payments Singapore, Pte. Ltd. holds an In-Principle Approval (IPA) from the Monetary Authority of Singapore (MAS) for a Major Payment Institution (MPI) licence under the Payment Service Act 2019, giving you a safe environment for crypto trading. 

This article is for informational purposes only and should not be considered financial or investment advice. Cryptocurrency transactions involve risks, including high fees during periods of network congestion.