What is Gas Fee on Ethereum?

The gas fee, or the gas price, is the transaction fee you pay on the Ethereum network that gets used to pay validators on the network.

When conducting a transaction on the Ethereum network, you may encounter terms like GWEI, Gas Limit, Gas Fee, and Priority fee. Let’s understand what exactly each of these terms means, how they affect the cost levied per transaction, and the significance of these numbers while using the Ethereum Virtual Machine.

But before that, let’s understand what the Gas fee is.

As described above, the Gas fee is the extra price levied on a transaction on the Ethereum blockchain that gets determined by various factors like network congestion, supply, and demand and which can lead to your transaction being processed faster or slower depending on the way you preset it during the transaction.

Before we see how this fee can affect the total amount you pay during the transaction, let’s understand the terms you will encounter while sending/receiving Ether, buying/selling NFTs, and deploying/interacting with smart contracts.

GWEI:

Wei is the smallest denomination of one ETH that you’re allowed to transact. 1 WEI is equal to 10e-18 ETH.
GWEI/Giga WEI is the billionth denomination of 1 ETH. or 1 GWEI = 10e9 WEI. To put it in perspective. As a penny/cent is the 100th denomination of a dollar, a paisa is the 100th denomination of a Rupee. Similarly, WEI is the 10e18th denomination of ETH.
There are other denominations of ETH that you can find in the chart below:
Ethereum denominations

Gas Limit:

Gas price gets calculated as per the units of the work done by the miner to process the block that includes your transaction.

Gas limit is the maximum units of gas you are willing to use to process your transaction. This means that the total transaction price for your transaction is equal to the gas price multiplied by the gas limit you set for your transaction.

Priority fee/miner tip:

As the name suggests, the priority fee is the extra amount you are willing to pay to process your transaction on priority. This fee gets directly credited to miners so that the miner can pick high-rewarding transactions to include in the next block. You get the transaction done quickly. Both stay happily ever after. Unless you pay too much of the priority fee.
Priority fees on MetaMask

The max fee:

The Max fee is the maximum amount you will pay after your transaction gets processed. Including the base gas fee required for the transaction and the max priority fee you applied.
Total fees on MetaMask