Crypto glossary

Base Fee

The base fee is the minimum price per unit of gas that every Ethereum transaction in a block must pay. The protocol sets it automatically based on demand, and the base fee portion of every transaction is burned rather than paid to validators.

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Where it came from

Before August 2021, Ethereum fees worked like a blind auction: users guessed a gas price, and miners picked the highest bids, which often led to overpaying. The London upgrade introduced EIP-1559, which split the fee into a protocol-set base fee and an optional priority fee, or tip, for validators.

How it adjusts

Each block has a gas target, half of its maximum size. If a block uses more gas than the target, the base fee for the next block rises, by up to 12.5%. If it uses less, the base fee falls. During sustained demand the fee climbs block after block until enough users wait, and in quiet periods it drifts down.

Because the next block's base fee is known in advance, wallets can estimate fees much more reliably than under the old auction.

A worked example

Say the base fee is 20 gwei, a gwei being one billionth of an ETH, and you send a simple ETH transfer that uses 21,000 gas with a tip of 1 gwei. You pay 21,000 times 21 gwei, which is 441,000 gwei or 0.000441 ETH. Of that, 420,000 gwei is burned and 21,000 gwei goes to the validator. If the next few blocks are full, the base fee might be noticeably higher by the time you send another transaction.

Why burning matters, and common mistakes

Burning the base fee removes ETH from circulation. When network activity is high, the amount burned can exceed new ETH issued to validators, making supply shrink for that period; when activity is low, supply grows. It also stops block producers from profiting by stuffing blocks with their own transactions to inflate fees.

Users often set a max fee too close to the current base fee; if it rises before inclusion, the transaction stalls. Remember too that the base fee is per unit of gas, so complex transactions such as swaps cost far more than simple transfers even at the same base fee.

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Frequently asked questions

Who receives the base fee?

Nobody. It is burned, permanently removing that ETH from supply. Only the priority fee goes to the validator.

Can I pay less than the base fee?

No. A transaction is only included if its max fee covers at least the current base fee; otherwise it waits until the base fee drops.

Do layer 2 networks have a base fee?

Many Ethereum layer 2s use a similar fee model for their own execution, plus a charge for posting data to Ethereum.

Related terms

GasGas FeeBurningMempoolValidatorLayer 2 (L2)

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