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What is Gas Fee? How to differentiate between Gas Price and Gas Limit?

Gas Fee is still a big problem on Ethereum Blockchain. So what is gas fee? Why is it so important? Let’s find the answer!
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4 min read
Published Mar 19 2021
Updated May 31 2024
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The overview of Gas Fee in crypto 

What is gas?

Gas is a unit of computer energy measurement used to perform a particular transaction on the network.

A motorcycle needs fuel to run and the same goes for blockchain trading. You need gas for the network to execute the transactions.

In the picture below, you can see that a transaction goes through many computational steps to execute, each of which requires gas to proceed.

what is gas fee

So, gas is used for:

Completing transactions.
Executing smart contracts.
Launching DApps.
Paying for data storage.

What is Gas Fee?

Gas Fee is a type of transaction fee that you have to pay to execute a transaction.


If you want to run 10km, you need to fill 0.5 liters of gasoline costing 9000 VND. Similarly, in blockchain and crypto, if you want to transfer 1000 ETH to another wallet on the Ethereum network, you need gas to conduct the transaction ⇒ This gas will be converted into ETH for you to pay.

Distinguishing Gas Limit and Gas Price

The Gas Fee structure consists of 2 parts: Gas Limit & Gas Price

What is Gas Limit?

Gas Limit is the maximum amount of gas that a user is willing to spend to execute or confirm a transaction.

The default value of the Gas Limit varies depending on the time and type of transaction and can be set up by the user.

The necessity for a Gas Limit to complete a transaction depends on the complexity of the transaction. The more complex the transaction is, the more computational resources are consumed, and thus the more gas is consumed.

What is Gas Price?

Gas Price is the amount of the blockchain’s native coin that users are willing to spend on each Gas unit.

Gas Price will influence the network speed of miner/validator and put them in the new block.

The higher the Gas Price the sender is willing to pay ⇒ The higher the miner/validator’s rewards ⇒ The quicker that the miner/validator will confirm your transaction.
In contrast, the lower the gas price the sender is willing to pay ⇒ The longer the sender will have to wait. If the transaction is not urgent, the sender can save money by setting a lower Gas Price.

In the Ethereum blockchain, Gas Price is calculated in Gwei, which itself is a denomination of ETH - each Gwei is equal to 0.00000001 ETH (10-9 ETH).

Example: Rather than saying Gas Fee is 0.00000001 ETH, you can say 1 Gwei. Currently, Ethereum is the blockchain that attracts many Dapps to build and develop on. DeFi players must understand Ethereum and its gas fee to keep up with the trend.

When trading on Ethereum, your Gas Limit is 21,000, and your Gas Price is 106 Gwei. Thus, the Gas Fee will be:

21,000 x 106 Gwei = 2.226,000 Gwei ~ 0.002226 ETH.

It means you are willing to pay 0.002226 ETH for this transaction.

Gas Fee on Blockchains

You will pay for the Gas Fee with the coins of the blockchain you are transacting on. This means that depending on different blockchain platforms, Gas fees are also calculated in different units.

In other words, when you make a transaction or want to transfer tokens on any blockchain, you will use the native coin of that blockchain to pay the transaction fee.

Gas Fee on each blockchain is entirely different. If you want to transact on any blockchain, you must make sure you have the original coin of that blockchain as Gas. Specifically:

To trade on Ethereum: To buy, sell or store ERC20 tokens like ETH, USDT ERC20, etc. ⇒ The gas fee will be paid with Ether (ETH).
To trade on Solana: To buy, sell or store SPL tokens like SRM, Ray, etc. ⇒ The gas fee will be paid with Solana (SOL).
To trade on Binance Smart Chain: To buy, sell or store BEP20 tokens, etc. ⇒ The gas fee will be paid with Binance Coin (BNB).

If you are still wondering which coin to use to pay for the Gas Fee when using which blockchain, you can take a look at the picture below:


Father Token: The coin used to pay for the gas fee on its corresponding blockchain.
Child Token: The token standards that are supported on the respective blockchains.

Why do you need Gas Fee?

Gas Fee is commonly used for:

Limit network spam, increasing security.
Increase the performance of processing the algorithms of transactions. Developers will have to limit the number of steps needed when executing a transaction to save costs.
Pay for efforts and compensate for the computing power used by miners.
why do you need gas fee

Gas Fee saving tips when swapping on AMMs

Recently, there are a lot of AMMs for you to use and trade, such as:

Pancakeswap on BSC;
SerumSwap, LunaDEX on Solana;
Uniswap, Sushiswap on Ethereum;
MDEX on Heco Chain.

To simplify the transactions on AMMs for you, Coin98 Wallet has integrated all 9 AMMs mentioned above into the Coin98 Mobile Wallet, along with a transaction fee optimization mechanism, Coin98 Wallet is a solution to help you experience an economic and fast trading process.

what is gas fee 2

In addition, you can follow these tips to save your gas fees.

Optimize transactions with the fewest steps possible since you will have to spend gas every step on the way, which could drastically increase the total gas fee in the long run.
Anticipate the amount of gas to prevent the lack of gas which causes the transaction to fail and incur additional fees. Use Scan websites to refer to transaction fees and choose when the gas is cheap to execute the transactions. For example, EtherScan for Ethereum, BSCscan for Binance Smart Chain, etc.
Monitor the network's transaction density to avoid network congestion, high gas fees, and the risk of transaction failure. For example: Before trading on Ethereum, you can check the transaction density information on:


Gas Fee has always been a concern when stepping into the Crypto world. Hopefully, this article has helped you understand it better and gain more tips to enhance your experience with Gas Fee.