The fee paid to validators for processing a transaction on a blockchain - denominated in the native currency and variable based on network congestion.
On Ethereum, every operation - token transfer, smart contract interaction, DeFi transaction - requires computational work by validators. Gas is the unit measuring that work. The gas fee is calculated as: gas units used × gas price (in gwei, where 1 gwei = 0.000000001 ETH). Since Ethereum's EIP-1559 upgrade, gas fees have two components: a base fee (burned, removing ETH from circulation) and a priority fee (tip paid to validators for faster inclusion).
Gas prices fluctuate dramatically with network demand. During NFT mints, DeFi liquidation cascades, or major market moves, gas fees can spike to hundreds of dollars per transaction. During low-demand periods, fees can fall to a few cents. This variability makes DeFi transactions expensive when timed poorly and creates a meaningful cost advantage for Layer 2 networks (Arbitrum, Optimism, Base) that batch transactions and settle to Ethereum at a fraction of the cost.
For active traders, gas fees are a transaction cost analogous to commission - they must be factored into yield calculations and trade sizing. A USD 50 DeFi swap on a USD 500 position is a 10% cost before price movement. Monitoring gas trackers (Etherscan Gas Tracker, Blocknative) allows traders to time transactions during low-demand windows.
Worked Example
A trader wants to swap ETH for USDC on Uniswap. Current base fee: 30 gwei. Priority fee: 2 gwei. The swap uses ~150,000 gas units. Total fee: 150,000 × 32 gwei = 4,800,000 gwei = 0.0048 ETH ≈ USD 15 at ETH/USD 3,000. On a USD 200 swap, the gas cost is 7.5% - making the Layer 2 version of the same trade far more economic.