Gas measures computational effort on Ethereum. Users or wallets specify a gas limit—a ceiling on how much gas a transaction can consume—to prevent runaway resource use.
The network dynamically sets a base fee based on block utilization. Users add a priority fee (tip) to incentivize validators to include their transaction. The final fee equals gas units actually consumed multiplied by the sum of base fee and priority fee.
The gas limit is a maximum, not a guarantee of consumption. If a transaction succeeds using less gas than its limit, the sender gets a refund for the unused portion. This means the final cost often falls below the displayed maximum.
EIP-1559, deployed in August 2021, introduced the base fee mechanism. This portion of each fee is burned, permanently removing ETH from circulation. The burn aims to make pricing predictable and reduce MEV by making block space costs explicit.
The priority fee goes directly to the validator. Users raise it to signal urgency; higher priority fees typically secure faster block inclusion during congestion.
Wallet software estimates a gas limit that buffers for computational variability, ensuring the transaction won't fail mid-execution. That estimate appears to the user as the ceiling, not the final charge. Actual consumption typically runs below it.
