Trail notes
- Gas measures the computing work a transaction needs; your fee is the gas used multiplied by the price per unit.
- On Ethereum, each fee has a base fee set by the network, which is burned, and an optional priority fee that goes to the validator.
- Fees don’t shrink with the amount you move, so small transactions can cost more than they earn.
- A failed transaction still uses gas, so you pay even when nothing happens.
- Layer 2 networks usually charge less, but moving funds onto and off them has costs and delays of its own.
What gas is
Every action on a blockchain, from sending a token to running a complex lending transaction, uses computing work on thousands of machines. Gas is the unit that measures that work. A plain transfer uses a small amount of gas; a swap that touches several contracts uses much more.
You pay for gas in the network’s own coin. On Ethereum that is Ether, priced in tiny units called gwei. Your fee is roughly:
Fee = gas units used × price per unit of gas. The gas units depend on what your transaction does. The price per unit depends on how busy the network is when you send it.
This is why you always need some of the network’s coin in your wallet, even if you only want to move a stablecoin. Without it, you can’t pay the fee, and the transaction can’t be sent.
Base fee and priority fee
On Ethereum, the price per unit has two parts:
- Base fee. Set by the network for each block according to demand. When blocks are full, it rises; when they are quiet, it falls. The base fee is burned, meaning it is removed from circulation rather than paid to anyone.
- Priority fee (tip). An extra amount you offer the validator to include your transaction. A higher tip can help in busy periods.
Your wallet also sets a maximum fee you’re willing to pay per unit and a gas limit, the most units the transaction may use. If the actual cost is lower, you only pay what was used. If the transaction needs more gas than the limit, it fails.
Other blockchains price fees differently, but the idea is the same: you pay for the network’s work, and the price moves with demand.
Most wallets hide these settings behind simple choices such as slow, normal or fast. That is fine for everyday use. It helps to know what sits underneath, though, because a fee estimate that looks far higher than usual can be a sign that the network is unusually busy or that the transaction is doing something more complex than you expected.
Why small transactions can be uneconomic
Gas is charged for the work, not the value. Moving $10 and moving $10,000 through the same contract costs about the same. That makes small DeFi positions expensive in percentage terms, especially when one strategy needs several transactions.
These numbers are illustrative only. Fees can be far lower on quiet days or other networks, and far higher in busy periods. The point is the structure: count every step and compare the total with what you expect to earn. Our gas break-even calculator does the arithmetic.
Failed transactions still cost gas
When a transaction fails, the network has still done the work of running it up to the point of failure. You pay for that work, and you get nothing in return.
- Out of gas. The gas limit was too low for the work needed.
- Slippage exceeded. The price moved further than your limit before the swap ran, so the contract cancelled it.
- Conditions changed. A deposit cap filled, a contract was paused or your balance changed.
- Stuck transactions. If your fee was too low, a transaction can sit pending. Wallets can often replace it with a higher fee or cancel it with a zero-value transaction using the same sequence number.
Many wallets show a preview or a warning when a transaction is likely to fail. If the preview looks wrong or the estimated fee is unusually high, stop and check before signing.
Layer 2 networks and other ways to pay less
Layer 2 networks bundle many transactions together and settle them on the main chain, so each user pays a share of one main-chain cost. Fees are often much lower. Your fee on a layer 2 usually has two parts: the cost of running your transaction there and your share of posting data to the main chain.
Lower fees come with trade-offs. You first have to move funds onto the layer 2, which costs a main-chain fee, and withdrawing back can involve delays. Each network has its own security assumptions. Our layer 2 networks and sidechains guide explains them.
- Send non-urgent transactions when the network is quieter.
- Avoid strategies that need frequent claiming or rebalancing on small balances.
- Group actions where an application lets you combine steps.
- Never pay “gas” to someone who messages you asking for a fee to release funds. That is a common scam.
Gas fees and your Canadian records
CRA asks crypto-asset users to keep, for each transaction, the date and time, the units and type of crypto-asset, its value in CAD at the time and the nature of the transaction, and to keep records for at least six years. CRA describes adjusted cost base as usually the cost plus acquisition expenses. How a particular network fee should be treated is a question to raise with a tax professional.
Paying gas also spends a small amount of the network’s coin. Under CRA’s general guidance, disposing of a crypto-asset can have tax consequences, so a busy DeFi year can produce hundreds of small records. A tool or spreadsheet started on day one saves a lot of reconstruction later. See our record keeping page and record keeper tool.
Your checklist
Questions people ask
What is a gas fee?
A gas fee is what you pay a blockchain network to process your transaction. It equals the gas your transaction uses multiplied by the current price per unit of gas, and it is paid in the network’s own coin.
Why did I pay gas for a failed transaction?
Because the network still ran your transaction until it failed. That computing work is charged whether or not the transaction succeeds, so a failed swap or deposit still costs a fee.
Why are gas fees sometimes so high?
Fees rise when many people want to use the network at once. On Ethereum, the base fee increases automatically when blocks are full, and users add higher tips to get included sooner.
Are layer 2 fees always cheaper?
Usually, but not always in total. Transactions on a layer 2 often cost less, but you pay to move funds onto it and may wait or pay more to move them back to the main chain.
Sources and dates
- Gas and fees — ethereum.orgreference
No date shown on page · checked 2026-10-31. How transaction fees (gas) work on Ethereum. - Layer 2 — ethereum.orgreference
No date shown on page · checked 2026-10-31. Rollups and other scaling networks. - Keeping books and records of crypto-assets for tax filing — Canada Revenue Agencyin force
Page date 2025-11-10 · checked 2026-10-30. What to record per transaction, wallet addresses, yearly balances; export platform history; keep records at least six years. - Reporting income from crypto-asset transactions — Canada Revenue Agencyin force
Page date 2025-12-02 · checked 2026-10-30. Business income vs capital gains is case by case; lists business indicators; crypto-to-crypto trades are dispositions; half of a capital gain is taxable. - Understanding crypto-assets and your tax obligations — Canada Revenue Agencyin force
No date shown on page · checked 2026-10-30. Defines crypto-assets; lists dispositions (sell, trade, barter, gift, gamble) and acquisitions including mining/staking rewards.
Education only. Nothing on this page is financial, investment, tax or legal advice, or a recommendation to buy, sell, stake, lend or borrow any crypto-asset. Crypto-assets can lose some or all of their value and are not covered by CDIC. Canadian rules change: check the dated sources above and talk to a qualified professional about your situation. Full disclaimer.