How network fees work: gas, EIP-1559 and sat/vB
The mechanics behind the fee your wallet shows: what you pay for, who sets the price, and where the money goes.
Network fees pay for space in a block. On Ethereum you pay gas used × (base fee + tip): the base fee is set by the protocol, rises or falls up to 12.5% per block depending on demand, and is burned; the tip goes to the validator. On Bitcoin there's no base fee: you bid a rate in satoshis per virtual byte (sat/vB) and miners pick the best-paying transactions.
This page is the mechanics. For the full list of fees you can pay when buying crypto (exchange fees, spreads, withdrawal fees), start with crypto transaction fees explained, and turn any of these numbers into dollars with the network fee calculator.
Ethereum: gas is a unit of work
Every operation on Ethereum costs a fixed amount of gas: a plain ETH transfer is 21,000 gas, a token transfer often 45,000–65,000, a swap on a decentralized exchange well over 100,000. Gas is priced in gwei, a billionth of an ETH. Each block also has a gas limit; validators raised it from 30 million to 60 million gas during 2025.
EIP-1559: base fee plus tip
Since the London upgrade (August 5, 2021), the fee per unit of gas has two parts:
- Base fee, set by the protocol for each block and burned (destroyed). Each block targets being half full. If a block is fuller than target, the next base fee rises, up to 12.5% for a completely full block; if emptier, it falls, by up to 12.5% for an empty one.
- Priority fee (tip), chosen by you and paid to the validator, to get included ahead of others when it's busy.
Worked example. You send ETH (21,000 gas) when the base fee is 2 gwei and you tip 0.1 gwei:
- Burned: 21,000 × 2 = 42,000 gwei
- To the validator: 21,000 × 0.1 = 2,100 gwei
- Total: 44,100 gwei = 0.0000441 ETH
Your wallet also sets a max fee, say 4 gwei, as a ceiling in case the base fee jumps before you're included. You're only charged base fee + tip; the rest of the 84,000 gwei reserved comes back. If the base fee rises above your max fee, the transaction waits.
Blob fees: a separate market for rollups
Since the Dencun upgrade in March 2024 (EIP-4844), rollups post their data in "blobs" that have their own base fee, adjusted the same way but against a separate blob target. That's why layer 2 fees fell sharply in 2024: rollup data stopped competing with ordinary transactions for gas. A layer 2 fee is roughly the layer 2's own execution cost plus a share of what it pays to post data to Ethereum.
Bitcoin: sat/vB and the fee auction
Bitcoin blocks are limited to 4 million weight units. A transaction's virtual size (vbytes) is its weight divided by four, and signature data counts less than other data since SegWit. You choose a fee rate in sat/vB; miners fill blocks with the highest-paying transactions first.
Worked example. A typical payment from one SegWit input to two outputs (the recipient plus your change) is about 140.5 vB. At 5 sat/vB the fee is 140.5 × 5 = 703 sats (rounded up). The fee depends on size in bytes, not on the amount sent: moving 0.001 BTC and 100 BTC can cost the same. Spending many small UTXOs makes a transaction bigger, so it costs more.
Stuck? If you paid too little, many wallets can replace-by-fee (RBF), re-sending the same payment with a higher fee, or the recipient can use child-pays-for-parent (CPFP), spending the unconfirmed coins with a high fee so miners take both.
| Compare | Ethereum | Bitcoin |
|---|---|---|
| What you pay for | Computation (gas) | Block space (vbytes) |
| Price unit | gwei per gas | sat/vB |
| Protocol-set part | Base fee, burned | None; pure auction |
| Goes to block producer | Tip only | The whole fee |
| Fee depends on amount sent? | No | No |
Limitations and gotchas
- Failed transactions still cost gas. If a contract call reverts, the work was done and the gas is kept.
- Estimates are guesses. Fees can change between the moment your wallet estimates and the moment a block includes you.
- You need the network's coin. To move a token on Ethereum you need ETH for gas, unless your wallet uses a paymaster (see account abstraction).
- Burning isn't a promise of scarcity. Whether ETH's supply shrinks or grows depends on how much is burned versus issued to validators, which changes with network activity.
Frequently asked questions
Why did my ETH transfer cost more than 21,000 gas?
It didn't use more gas; the price per gas was higher. Or you weren't sending plain ETH: token transfers and contract calls use more gas.
Where does the burned base fee go?
Nowhere. It's removed from the supply permanently, so neither validators nor anyone else receives it.
What is a good sat/vB rate?
It changes minute to minute. Check a fee estimator such as mempool.space (type the address yourself; a fee estimator never needs your wallet), and pay less if you're not in a hurry.
Why are layer 2 fees so much lower?
Rollups bundle many transactions together and, since March 2024, post their data in cheaper blobs instead of regular Ethereum transaction data.
Can I get a refund for a high fee?
No. Once confirmed, network fees can't be refunded. Unconfirmed Bitcoin transactions can sometimes be replaced with RBF, but that raises the fee, not lowers it.
Where to next
Sources
- EIP-1559: Fee market change
- Gas and fees (ethereum.org)
- EIP-4844: Shard blob transactions
- Ethereum forks timeline (ethereum.org)
- BIP 141: Segregated Witness (weight and virtual size)
- BIP 125: Opt-in replace-by-fee
- Ethereum reaches 60M gas limit before Fusaka (CoinMarketCap Academy)
Written for beginners and checked against the sources listed. Last reviewed November 4, 2026. This page is educational and is not financial, tax or legal advice. How we write and check pages.