Definition
Gas Fee
A gas fee is the payment, in a blockchain's native token, that users pay to have their transaction processed and recorded by the network. This is informational.
A gas fee compensates the validators or miners who process transactions and run smart-contract code on a blockchain. It is paid in the network's native token and varies with how busy the network is — fees can spike during congestion.
Complex operations (like DeFi interactions) consume more gas than simple transfers. High and unpredictable fees can make small transactions uneconomical on busy networks, which is one reason alternative and 'layer-2' networks emerged.
Gas fees are a real cost of using blockchains and are not deductible against crypto gains under India's VDA tax rules. This entry is informational only, not investment advice.
Related terms
- BlockchainA blockchain is a shared, append-only digital ledger where transactions are grouped into cryptographically linked blocks, making records hard to alter without consensus.
- Smart ContractA smart contract is self-executing code on a blockchain that automatically carries out agreed actions when conditions are met, without an intermediary. This is informational, not advice.
- Mining (Crypto)Crypto mining is the process by which some blockchains validate transactions and create new coins through computational work, rewarding participants who solve cryptographic puzzles. This is informational.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.