How Network Fees, Gas, and Gas Limits Work

Every time you interact with a blockchain, the network needs to process your request. That work isn't done for free.

A network fee is the amount you pay to the blockchain itself for processing your transaction. These fees reward people who are securing the network and verifying transactions—validators or miners on some blockchains. Fees also help prevent spam. If transactions were completely free, anyone could flood the blockchain with millions of requests and make it unusable.

One important thing to remember is that network fees are not paid to Guarda. When you mail a letter, you pay the postal service to deliver it, not the company that made the envelope. Network fees work in much the same way and go directly to the blockchain that processes your transaction.

What's the difference between a network fee, gas, and gas limit?

The short answer is that gas is simply one way of describing a network fee. The names are different, but they all describe the same idea: paying the blockchain to process your transaction.

The Ethereum blockchain introduced the term "gas” for the network fees*.* Therefore, many Ethereum-compatible networks use it as well. Other blockchains use different terminology. TRON measures resources using Bandwidth and Energy, Bitcoin simply charges a transaction fee, and Solana has its own fee model altogether.

On Ethereum and many Ethereum-compatible networks, the total gas fee consists of two parts:

• The base fee is the minimum amount required to process your transaction. This fee is determined automatically by the network based on current demand.
• A priority fee (tip) is an optional extra amount you can pay to encourage validators to prioritize your transaction, especially when the network is busy and you need your transaction done ASAP.

You may also come across the term gas limit. A higher gas limit doesn't automatically mean you'll pay more. It simply sets the maximum amount of gas a transaction is allowed to use. Most regular transfers don't require you to think about it because wallets like Guarda calculate it automatically. More advanced transactions, such as interacting with smart contracts, may require higher or custom gas limits.

What Determines a Network Fee?

There's no single price for blockchain transactions. Network fees constantly change depending on what's happening on the network.

1. Network congestion is the biggest factor.

   When many people are trying to send transactions at the same time, fees usually increase because users compete for limited space in each block.

2. Type of transaction also matters.

   Sending Bitcoin from one wallet to another is generally much simpler than interacting with a decentralized application or executing a complex smart contract, so more complicated operations often cost more.

3. Blockchain’s own way of calculating fees.

   Ethereum, Bitcoin, TRON, Polygon, Solana, and BNB Smart Chain all work differently, which is why the same transfer can cost very different amounts depending on the network you choose. Sending 100 USDT over Ethereum may cost much more than sending 100 USDT over TRON because each blockchain has its own fee model.

4. The fact of a transaction taking place.

   In most cases, the amount you're sending doesn't determine the fee. Sending $10 and $10,000 often costs the same because both transactions require similar work from the blockchain.

Before you confirm a transaction, Guarda estimates the current network fee based on blockchain conditions. Since network activity changes constantly, the final fee may differ slightly by the time your transaction is processed.

Why Do I Need Native Cryptocurrency to Transfer My USDT?

This is another question that surprises many beginners. You might have plenty of USDT in your wallet but still be unable to send it. That's because network fees are almost always paid using the blockchain's native coin.

For example, you'll need:

• ETH to send USDT ERC-20 tokens on Ethereum.
• TRX to send USDT TRC-20 tokens on TRON.
• BNB to send USDT BEP-20 tokens on BNB Smart Chain.
• POL to send tokens on Polygon.

There are thousands and thousands of tokens in the crypto world and hardly over one thousand blockchains. But blockchains define one native asset for paying transaction fees. That's how they're designed.

Without enough of the native coin, the network won’t be able to process your transaction. Read more about networks here

Common Misconceptions

There are a few misunderstandings that come up regularly.

1. Guarda keeps network fees

   These fees always go to the blockchain validators or miners.

2. Paying a higher fee makes Guarda process transactions faster.

   In reality, fees only affect how quickly the blockchain confirms your transaction.

3. Failed transactions don’t consume network fees

   They do if the blockchain has already started processing them.

4. Network fees, exchange fees, and swap fees are the same thing.

   They're separate charges, and depending on the transaction, a swap may involve multiple blockchain transactions, each with its own network fee.

Before You Send Crypto

Before confirming any transaction, take a moment to check a few things.

• Make sure you have enough native coins to pay the network fee.
• Double-check that you're using the correct blockchain network.
• Review the estimated network fee before confirming.
• If fees seem unusually high, consider waiting until network activity decreases.

A few seconds of checking can help you avoid failed transactions, unnecessary fees, and costly mistakes.

Glossary