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Glossary

Gas Token

A gas token is the native cryptocurrency used to pay for transaction fees on a blockchain network. It powers the execution of operations like sending assets, deploying smart contracts, and interacting with decentralized applications. Without gas tokens, users wouldn’t be able to interact with the network, as they are required to compensate validators or miners for computational work.

Examples include ETH on Ethereum, BNB on BNB Chain, MATIC on Polygon, and AVAX on Avalanche.

How Gas Tokens Work

  • Used for Fees – Every blockchain transaction requires a gas token to be processed.
  • Paid to Validators – These tokens compensate nodes for validating and securing the network.
  • Fee Varies by Demand – Gas costs rise with network congestion and fall during low activity.
  • Burn or Redistribution – Some blockchains burn part of the gas fee or send it to the treasury.
  • Cannot Be Replaced – Gas tokens are mandatory for using the network and cannot be paid with other tokens.

Key Features

  • Network Utility – Gas tokens are essential for all on-chain activity.
  • Dynamic Pricing – Most chains use variable gas pricing based on demand and block space.
  • Burnable or Inflationary – Protocols may burn gas tokens (e.g. EIP-1559) or mint more over time.
  • Native Currency – Gas tokens are the base layer asset for a given chain.
  • Wallet Requirement – Users must hold a small amount of gas token to use any dApp.

Benefits of Gas Tokens

  • Secures the Network – Incentivizes validators/miners to process and validate transactions.
  • Regulates Usage – Prevents spam and abuse by adding cost to on-chain actions.
  • Economic Alignment – Network health and gas token value are closely linked.
  • Essential for DeFi & NFTs – Enables everything from trades to minting to governance.
  • User Awareness – Teaches users about transaction costs and network efficiency.

Use Cases of Gas Tokens

  1. Paying Transaction Fees – Sending ETH on Ethereum or MATIC on Polygon requires gas.
  2. Smart Contract Execution – Deploying or interacting with contracts consumes gas tokens.
  3. dApp Usage – Swapping tokens on Uniswap or PancakeSwap requires gas.
  4. NFT Minting – Users pay gas when minting NFTs or transferring them.
  5. Bridge Operations – Moving assets between chains involves paying gas on both sides.
  6. Validator Incentives – Gas fees are distributed to node operators securing the network.

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