What are gas fees?
Gas fees are the payments a user makes to have a transaction processed on a blockchain network. Every action that changes the state of the chain, sending a token, swapping an asset, interacting with a smart contract, requires computation. Validators or miners carry out that computation and need to be paid for it. Gas is the unit that measures how much computational work a transaction requires.
The fee itself is the amount of gas a transaction uses, multiplied by the price per unit of gas at that moment. On Ethereum, that price is quoted in gwei, a denomination equal to one-billionth of an ETH.
How are gas fees calculated?
The basic formula is the same across most EVM-compatible chains: gas used, multiplied by gas price, equals the total fee.
A simple example: a basic ETH transfer uses 21,000 units of gas. If the gas price is 30 gwei, the fee is 21,000 times 30 gwei, or 630,000 gwei, which equals 0.00063 ETH.
Two related terms matter here. Gas limit is the maximum amount of gas a user is willing to pay for a transaction, a safety cap. Gas used is the actual amount consumed. A user only pays for gas used, not the full limit. If a transaction needs more gas than the limit allows, it fails and reverts, but the gas already consumed up to that point is still paid.
What changed with EIP-1559?
Before August 2021, Ethereum used a simple auction model. Every user submitted a single gas price bid, and miners picked the highest bids first. This created constant guesswork. Bid too low and a transaction could stall for blocks. Bid too high and money was wasted.
The London hard fork introduced EIP-1559, replacing that auction with a two-part fee structure:
- Base fee: Set automatically by the protocol, not by the user. It adjusts based on how full recent blocks have been, rising when the network is busy and falling when it is quiet, by up to 12.5% per block. The base fee is burned, meaning it is permanently removed from circulation rather than paid to anyone.
- Priority fee (tip): An optional amount the user adds on top of the base fee, paid directly to the validator. A higher tip moves a transaction up the queue during congestion.
The total fee is gas used, multiplied by base fee plus priority fee. Since EIP-1559 launched, Ethereum has burned over 4.52 million ETH through this mechanism, which has made ETH deflationary during periods of heavy network use.
Why do gas fees spike during high demand?
Block space is limited. When more transactions compete for inclusion than a block can hold, the base fee rises to ration that space. Historical spikes track directly with demand surges. During DeFi Summer in 2020, average gas prices reached roughly 480 gwei as users competed for trades and yield farming positions. Similar spikes followed the NFT boom in 2021.
The 12.5% per-block adjustment cap means fees cannot spike instantly. It takes several consecutive full blocks to drive a large increase, and fees decay at the same rate once demand falls back.
Why do gas fees vary so much across networks?
Not every blockchain uses "gas" as the term, and fee models differ significantly between networks.
Every EVM-compatible chain requires the network's own native token to pay fees. ETH on Ethereum mainnet does not cover a transaction on Arbitrum; that requires ETH held on Arbitrum specifically.
Layer 2 networks exist largely to make fees cheaper. By batching many transactions and posting compressed data back to the underlying Layer 1, L2s bring typical fees down to fractions of a cent.
Non-EVM chains handle this differently again. Solana does not use the term "gas fees" at all. It charges flat fees regardless of network congestion, which is one reason it has become popular for high-frequency stablecoin transfers.
How does chain choice affect gas costs in stablecoin payments?
For platforms moving stablecoins across multiple chains, gas fees are a direct cost input, not a background detail. The same payment can cost very differently depending on the route:
- Routed over Ethereum mainnet during a congestion spike: potentially dollars in gas
- Routed over a Layer 2 or Solana: fractions of a cent, regardless of timing
Stablecoin orchestration platforms exist to make this routing decision automatically, selecting a network based on cost, speed, and liquidity rather than leaving it to manual monitoring. CCTP still requires gas on both ends of a transfer to execute the burn and mint, so chain selection matters even when moving native USDC.
Due's stablecoin infrastructure handles this on the backend. A platform's end user sees a local currency amount go in and a local currency amount come out. Which chain the transaction routed through, and what it cost in gas, stays Due's operational concern rather than something the business has to manage.
