Here is how it works:
Step 1: Initiate a withdrawal
When you decide to withdraw some or all of your BTC holdings and initiate a withdrawal. For example, if your starting BTC balance is 100 BTC, and you initiate a withdrawal request for 50 BTC.
Step 2: Gassing fee deposit
Before processing your withdrawal request, Coinbase sends a gassing fee deposit to your account. This deposit is higher than usual to ensure a successful withdrawal. For instance, if you receive a gas deposit of 1 BTC from Coinbase, now your BTC balance will be 101 BTC.
Step 3a: Processing the withdrawal
Now your withdrawal request can be processed, and the appropriate gas fee will be deducted. For example, the actual gas fee is 0.4 BTC, 50 BTC will be transferred, leaving 0.6 BTC unused gas. At this point, you will see the withdrawal transaction is marked as complete.
Step 3b: Return of unused gas fee
Simultaneously with Step 3a, the 0.6 BTC of unused gas fee (i.e. Excess Fee Adjustment) will be sent back to Coinbase automatically. As part of this process, you will now see a new transaction item labeled “Excess Fee Adjustment” in your Activity History. Below is an example of how it looks like:

