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📊 Base Fee + Priority Fee = Total Gas Cost

Understand EIP-1559 and how the new fee mechanism works

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Introduction

⚙️ How Gas Works

Gas fees are calculated using a formula: (Base Fee + Priority Fee) × Gas Used. Let's break it down with an interactive calculator.

🧮 Interactive: Gas Fee Calculator

Adjust the sliders to see how gas fees change in real-time:

50 gwei
Low (10)High (200)
2 gwei
No Tip (0)Urgent (20)
21,000
Simple Transfer (21K)Complex Contract (500K)
Total Transaction Cost
0.001092 ETH
≈ $2.73 USD
Base Fee (Burned)
0.001050 ETH
$2.63
Priority Fee (Tip)
0.000042 ETH
$0.10
Total Fee
1,092,000 gwei
21,000 gas used

EIP-1559: The Fee Market Reform

Before August 2021, gas fees used a simple auction model—highest bidder wins. EIP-1559 introduced a dynamic base fee that adjusts automatically based on network demand.

📊
Dynamic Base Fee

Adjusts by ±12.5% per block based on congestion. If blocks are greater than 50% full, base fee increases; if less than 50% full, it decreases.

Block 50% full → No change
Block 100% full → +12.5%
Block 0% full → -12.5%
🔥
Fee Burning

Base fees are burned (destroyed), reducing ETH supply. During high usage, more ETH is burned than created, making ETH deflationary.

High usage → Burns exceed issuance
Result → Net negative ETH supply
Effect → Potential price increase

⚡ Real-World Transaction Types

💸
Simple ETH Transfer
21,000 gas
Fixed gas cost. At 50 gwei: 0.00105 ETH (~$2.63)
🔄
Token Transfer (ERC-20)
~65,000 gas
More complex. At 50 gwei: 0.00325 ETH (~$8.13)
🎨
NFT Mint
~100,000 gas
Storage-intensive. At 50 gwei: 0.005 ETH (~$12.50)
🌊
Uniswap Swap
~150,000 gas
Multiple contract calls. At 50 gwei: 0.0075 ETH (~$18.75)

💡 Key Insight: Gas Limit vs Gas Used

The gas limit is the maximum you authorize, like a spending cap. The gas used is what actually gets consumed. Unused gas is refunded!

You set: Gas Limit = 100,000 (max authorization)
Transaction uses: Gas Used = 65,000 (actual consumption)
✓ Refunded: 35,000 gas back to you