What Is the Network Fee in Blockchain?
The network fee (or transaction fee) is a small charge automatically added to every transaction. In simple terms, whenever you send cryptocurrency (like BTC, SOL, or BNB), you pay a fee that goes to the network participants who process and confirm transactions. Unlike banks, where fees are often hidden in exchange rates or monthly payments, blockchain fees are fully transparent and shown right away. The fee is paid in the native token of each network - for example, ETH on Ethereum or TRX on Tron.
Key Takeaways
- In 2023, Paxos accidentally paid 19.8 BTC (around $520,000) in fees for a transfer worth only $2,000.
- During the Doodles NFT launch in 2021, the average transaction fee reached 4 ETH - users increased it to get their NFTs first.
Why Transaction Fees Exist?
Transaction fees perform several key functions - they maintain the security, efficiency, and stability of the blockchain.
Reward and Motivation: The network fee serves as a reward and incentive for participants who keep the network running and confirm transactions. Without this fee, the blockchain simply couldn’t function.
Speed Control: When the network is overloaded, users can increase the fee so their transactions are processed faster.
Spam Protection: Even a small mandatory fee helps protect the network from spam and unnecessary transactions.
The size of the fee directly affects the transaction confirmation speed - let’s see how it actually works.
How to Make Your Transactions Instant With Network Fee
Most wallets and blockchains allow you to choose the confirmation speed of a transaction: slow, normal, or fast. The difference lies in the size of the network fee - the higher you set it, the faster the network will process your transfer.
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Slow - for those who can wait. For example, if you’re sending a small amount of BNB between your own wallets, you can choose the minimum fee and wait for confirmation without overpaying.
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Normal - the best option for everyday use. For instance, when swapping ETH for USDT, this setting offers a balance between speed and cost - perfect for most operations.
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Fast - when every second matters. For example, if you’re joining a token sale on Solana or want to buy crypto quickly on a DEX, you can choose a higher fee so your transaction gets into the next block first and you don’t miss the right price.
Who Gets the Transaction Fees?
The transaction fee doesn’t go to any platform or wallet - it goes directly to the decentralized network itself. In Proof-of-Work blockchains (like Bitcoin), the fee goes to miners - people or companies who invest in specialized equipment and build data centers to process transactions. In Proof-of-Stake networks (such as Ethereum, Cardano, Solana, and Tron), the fee is received by validators who confirm transactions and maintain the stability of the network.
Network Fees In Popular Blockchains
Each blockchain has its own way of calculating and distributing fees. Let’s start with Bitcoin - the first and most well-known network.
Network Fees in the Bitcoin Blockchain
Bitcoin transactions include a small fee paid in BTC, which goes to miners for confirming them. All new transactions first go into the mempool - a queue of unconfirmed transactions. Miners pick the ones with higher fees because it directly affects their earnings, so transactions with higher fees are processed faster.
It’s important to set the transaction fee carefully - in 2023, the company Paxos accidentally paid 19.8 BTC (around $520,000) in fees for a transfer worth only $2,000.
What Is the Bitcoin Mempool?
The mempool is a queue of transactions that have already been sent but haven’t yet been confirmed by the network. Until miners include them in a block, they wait for their turn. The chart below shows how this looks in real time: on the left is a “map” of all pending transactions (each square represents one transfer), and on the right is the stream of new transactions entering the network every second.
The chart shows the Bitcoin mempool in real time: on the left are pending transactions with their fees (higher fee means higher priority), and on the right is the flow of new transactions affecting network load and confirmation speed. Source: mempool.space
Network Fees on the Ethereum Blockchain (Gas Fees)
In the Ethereum network, the transaction fee is called gas - it’s the cost paid for performing any action on the blockchain. Each Ethereum transaction consists of two parts: the base fee, which is burned and reduces the total ETH supply, and the priority fee, which is a small tip paid to validators for faster confirmation. For example, if you send 1 ETH to a friend, your balance might decrease by 1.0023 ETH - the recipient gets 1 ETH, while the rest covers the network fee and validator reward.
Network Fees on the TRON
The TRON blockchain is built for fast and low-cost transactions. Fees are paid in the native token TRX and depend on two network resources - Energy and Bandwidth. Regular transactions, like sending TRX between wallets, use Bandwidth, which is provided to users for free every day. If you often send USDT TRC20, you can reduce your network fees to almost zero by staking TRON to get Energy, which is used to pay for transactions.
Network Fee on the Solana Blockchain
Compared to competing blockchains like Ethereum, Solana processes transactions much faster and charges significantly lower fees. In Solana, fees are paid in the native token SOL and remain among the lowest in the crypto industry - about 0.000005 SOL (around $0.001) per transaction. There are also unconfirmed reports within the community that some validators use internal “whitelists” - lists of verified nodes whose transactions are processed with priority. This is seen as an anti-spam measure that helps prevent network overload.
After reviewing different networks, it becomes clear: the speed and cost of transactions depend on the chosen fee. But why is that so important?
Why Network Fee Is Important in Blockchain
The network fee isn’t just a charge for sending crypto - it’s a mechanism that determines how fast your transaction will be processed. The higher the fee, the faster it’s confirmed - and in trading, that can mean the difference between profit and loss: if you’re quick, you earn; if you’re late, you miss the opportunity.
The same happens during NFT mints, where thousands of users compete for a limited number of tokens. For example, during the Doodles collection launch (10,000 NFTs) in 2021, the average fee for a successful transaction reached 4 ETH. Many users manually increased their fees several times (x2–x10) to make sure their transactions were confirmed first.
However, you don’t always need to overpay. If you’re simply transferring BTC between your own addresses or sending funds without urgency, you can lower the fee and wait for confirmation later - it’s both safe and cost-effective.
Top NFT Collections: during mint, speed and fee decide - those who pay more get the NFT first. Source: opensea.io
Gem Wallet - the Best Wallet for Managing Network Fees
Gem Wallet is a self-custody wallet that gives users full, secure, and transparent control over transaction costs. The wallet doesn’t charge its own fees - all costs are fully determined by the blockchain network and paid in the network’s native tokens. That’s why your balance should always include a small amount of BTC, ETH, BNB, or other tokens to cover network fees. When sending or swapping crypto, you can choose the fee option that suits you best - Slow, Normal, or Fast - depending on whether you prefer lower costs or quicker confirmations.
If you set the fee too low, your transaction might get stuck in the network and take several days or even months to process. If this happens, please contact our support team for help.
Thanks to its smart interface and flexible settings, Gem Wallet makes choosing the right fee simple, transparent, and efficient - you always decide how fast your transaction should go.
Manage network fees in Gem Wallet: choose Slow, Normal, or Fast - set your transaction speed in one click.
