# Fee reduction tips

To process a transaction on Ethereum (Layer 1), you need to pay a gas fee. More specifically, the fee to offset the computational effect required to execute a specific operation on the Ethereum network, multiplied by the gwei, which is a representation of the current network congestion. Simply put, the gas fee offsets the energy costs used to process your transaction, multiplied by a representation of how many other people are also trying to process transactions. The more people making transactions, the higher the gas fee.

Since each Ethereum Layer 1 (L1) transaction requires computational resources to execute, each transaction requires a fee. The transaction will only execute if enough funds have been sent to cover the transaction’s gas fee.

### Why do I need to pay a setup fee? <a href="#why_do_i_need_to_pay_a_setup_fee" id="why_do_i_need_to_pay_a_setup_fee"></a>

The setup fee is required to pay the gas for deploying the wallet’s smart contract on L1 of the Ethereum network.

### Does Loopring profit from gas fees? <a href="#does_loopring_profit_from_gas_fees" id="does_loopring_profit_from_gas_fees"></a>

No, all the L1 gas fees for executing transactions are paid to Ethereum block miners.

### How can I reduce my gas fees? <a href="#how_can_i_reduce_my_gas_fees" id="how_can_i_reduce_my_gas_fees"></a>

You can reduce the overall fee by submitting transactions when network congestion is low. See the following for more details on gas and Ethereum costs:

* [Ethereum.org - Gas](https://ethereum.org/en/developers/docs/gas/)
* [Ethereum Gas Price Chart](https://ethereumprice.org/gas/)
* [Etherscan Gas Tracker](https://etherscan.io/gastracker)


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