diff --git a/PENDING.md b/PENDING.md
index daab6b8d4436..cfc05d20d773 100644
--- a/PENDING.md
+++ b/PENDING.md
@@ -14,6 +14,8 @@ BREAKING CHANGES
 
 * Gaia
   * https://github.com/cosmos/cosmos-sdk/issues/2838 - Move store keys to constants
+  * [\#3162](https://github.com/cosmos/cosmos-sdk/issues/3162) The `--gas` flag now takes `auto` instead of `simulate`
+    in order to trigger a simulation of the tx before the actual execution.
 
 * SDK
   * [\#3064](https://github.com/cosmos/cosmos-sdk/issues/3064) Sanitize `sdk.Coin` denom. Coins denoms are now case insensitive, i.e. 100fooToken equals to 100FOOTOKEN.
diff --git a/client/flags.go b/client/flags.go
index 7b37ec7154ef..4589d7fe0b59 100644
--- a/client/flags.go
+++ b/client/flags.go
@@ -1,7 +1,6 @@
 package client
 
 import (
-	"errors"
 	"fmt"
 	"strconv"
 
@@ -16,7 +15,7 @@ const (
 	// occur between the tx simulation and the actual run.
 	DefaultGasAdjustment = 1.0
 	DefaultGasLimit      = 200000
-	GasFlagSimulate      = "simulate"
+	GasFlagAuto          = "auto"
 
 	FlagUseLedger          = "ledger"
 	FlagChainID            = "chain-id"
@@ -92,7 +91,7 @@ func PostCommands(cmds ...*cobra.Command) []*cobra.Command {
 		c.Flags().Bool(FlagGenerateOnly, false, "build an unsigned transaction and write it to STDOUT")
 		// --gas can accept integers and "simulate"
 		c.Flags().Var(&GasFlagVar, "gas", fmt.Sprintf(
-			"gas limit to set per-transaction; set to %q to calculate required gas automatically (default %d)", GasFlagSimulate, DefaultGasLimit))
+			"gas limit to set per-transaction; set to %q to calculate required gas automatically (default %d)", GasFlagAuto, DefaultGasLimit))
 		viper.BindPFlag(FlagTrustNode, c.Flags().Lookup(FlagTrustNode))
 		viper.BindPFlag(FlagUseLedger, c.Flags().Lookup(FlagUseLedger))
 		viper.BindPFlag(FlagChainID, c.Flags().Lookup(FlagChainID))
@@ -142,7 +141,7 @@ func (v *GasSetting) Set(s string) (err error) {
 
 func (v *GasSetting) String() string {
 	if v.Simulate {
-		return GasFlagSimulate
+		return GasFlagAuto
 	}
 	return strconv.FormatUint(v.Gas, 10)
 }
@@ -152,12 +151,12 @@ func ParseGas(gasStr string) (simulateAndExecute bool, gas uint64, err error) {
 	switch gasStr {
 	case "":
 		gas = DefaultGasLimit
-	case GasFlagSimulate:
+	case GasFlagAuto:
 		simulateAndExecute = true
 	default:
 		gas, err = strconv.ParseUint(gasStr, 10, 64)
 		if err != nil {
-			err = errors.New("gas must be a positive integer")
+			err = fmt.Errorf("gas must be either integer or %q", GasFlagAuto)
 			return
 		}
 	}
diff --git a/client/lcd/lcd_test.go b/client/lcd/lcd_test.go
index b6b7a771758a..5c6d7de1835c 100644
--- a/client/lcd/lcd_test.go
+++ b/client/lcd/lcd_test.go
@@ -190,10 +190,23 @@ func TestCoinSend(t *testing.T) {
 	require.Equal(t, http.StatusInternalServerError, res.StatusCode, body)
 	require.Nil(t, err)
 
+	// test failure with negative gas
+	res, body, _ = doTransferWithGas(t, port, seed, name1, memo, pw, addr, "-200", 0, false, false, fees)
+	require.Equal(t, http.StatusBadRequest, res.StatusCode, body)
+
 	// test failure with negative adjustment
 	res, body, _ = doTransferWithGas(t, port, seed, name1, memo, pw, addr, "10000", -0.1, true, false, fees)
 	require.Equal(t, http.StatusBadRequest, res.StatusCode, body)
 
+	// test failure with 0 gas
+	res, body, _ = doTransferWithGas(t, port, seed, name1, memo, pw, addr, "0", 0, false, false, fees)
+	require.Equal(t, http.StatusInternalServerError, res.StatusCode, body)
+
+	// test failure with wrong adjustment
+	res, body, _ = doTransferWithGas(t, port, seed, name1, memo, pw, addr, client.GasFlagAuto, 0.1, false, false, fees)
+
+	require.Equal(t, http.StatusInternalServerError, res.StatusCode, body)
+
 	// run simulation and test success with estimated gas
 	res, body, _ = doTransferWithGas(t, port, seed, name1, memo, pw, addr, "10000", 1.0, true, false, fees)
 	require.Equal(t, http.StatusOK, res.StatusCode, body)
@@ -228,7 +241,7 @@ func TestCoinSendGenerateSignAndBroadcast(t *testing.T) {
 	acc := getAccount(t, port, addr)
 
 	// generate TX
-	res, body, _ := doTransferWithGas(t, port, seed, name1, memo, "", addr, "200000", 1, false, true, fees)
+	res, body, _ := doTransferWithGas(t, port, seed, name1, memo, "", addr, client.GasFlagAuto, 1, false, true, fees)
 	require.Equal(t, http.StatusOK, res.StatusCode, body)
 	var msg auth.StdTx
 	require.Nil(t, cdc.UnmarshalJSON([]byte(body), &msg))
diff --git a/cmd/gaia/cli_test/cli_test.go b/cmd/gaia/cli_test/cli_test.go
index ba92f838d880..bd001f649071 100644
--- a/cmd/gaia/cli_test/cli_test.go
+++ b/cmd/gaia/cli_test/cli_test.go
@@ -188,7 +188,7 @@ func TestGaiaCLIGasAuto(t *testing.T) {
 	require.False(t, success)
 
 	// Enable auto gas
-	success, stdout, _ := executeWriteRetStdStreams(t, fmt.Sprintf("gaiacli tx send %v --json --gas=simulate --amount=10%s --to=%s --from=foo", flags, stakeTypes.DefaultBondDenom, barAddr), app.DefaultKeyPass)
+	success, stdout, _ := executeWriteRetStdStreams(t, fmt.Sprintf("gaiacli tx send %v --json --gas=auto --amount=10%s --to=%s --from=foo", flags, stakeTypes.DefaultBondDenom, barAddr), app.DefaultKeyPass)
 	require.True(t, success)
 	// check that gas wanted == gas used
 	cdc := app.MakeCodec()
@@ -563,7 +563,7 @@ func TestGaiaCLISendGenerateSignAndBroadcast(t *testing.T) {
 
 	// Test generate sendTx, estimate gas
 	success, stdout, stderr = executeWriteRetStdStreams(t, fmt.Sprintf(
-		"gaiacli tx send %v --amount=10%s --to=%s --from=foo --gas=simulate --generate-only",
+		"gaiacli tx send %v --amount=10%s --to=%s --from=foo --gas=auto --generate-only",
 		flags, stakeTypes.DefaultBondDenom, barAddr), []string{}...)
 	require.True(t, success)
 	require.NotEmpty(t, stderr)
diff --git a/docs/gaia/gaiacli.md b/docs/gaia/gaiacli.md
index ba2e8c8c014b..102de5c8924b 100644
--- a/docs/gaia/gaiacli.md
+++ b/docs/gaia/gaiacli.md
@@ -134,7 +134,7 @@ The `--amount` flag accepts the format `--amount=<value|coin_name>`.
 
 ::: tip Note
 You may want to cap the maximum gas that can be consumed by the transaction via the `--gas` flag.
-If you pass `--gas=simulate`, the gas limit will be automatically estimated.
+If you pass `--gas=auto`, the gas supply will be automatically estimated before executing the transaction.
 Gas estimate might be inaccurate as state changes could occur in between the end of the simulation and the actual execution of a transaction, thus an adjustment is applied on top of the original estimate in order to ensure the transaction is broadcasted successfully. The adjustment can be controlled via the `--gas-adjustment` flag, whose default value is 1.0.
 :::