Gas fees are the cost of doing business on Ethereum and other blockchains. Understanding how they work helps you optimize your DeFi transactions and avoid overpaying.
What Are Gas Fees?
Gas is the unit measuring computational effort required to execute transactions on Ethereum. Every action—sending tokens, swapping on a DEX, providing liquidity—requires gas. Fees are paid to validators who process your transactions.
How Gas Prices Work
Gas prices are measured in gwei (1 gwei = 0.000000001 ETH). Prices fluctuate based on network demand. During busy periods, fees spike as users compete to have their transactions processed faster.
Strategies to Reduce Gas Costs
- Time your transactions during low-activity periods (weekends, early mornings)
- Use Layer 2 networks like Arbitrum or Optimism for 10-50x lower fees
- Batch multiple actions when possible
- Set reasonable gas limits—don’t overpay for priority
- Use gas tracking tools to monitor current prices
Layer 2: The Gas Solution
Layer 2 networks process transactions off the main Ethereum chain, dramatically reducing costs while maintaining security. Most major DeFi protocols now operate on L2s, making them the preferred choice for frequent traders.