Every action on Ethereum — sending a token, interacting with a smart contract, minting an NFT — consumes computational resources from every node that processes it. "Gas" is the unit that measures how much computation a given transaction requires.
Each operation a smart contract performs has a fixed gas cost, so a simple transfer costs far less gas than a complex multi-step DeFi transaction. The total fee paid is that gas amount multiplied by the current gas price, which fluctuates with network demand — more people trying to transact at once pushes the price up, since block space is limited.
Since the EIP-1559 upgrade, Ethereum splits the fee into a "base fee" that's algorithmically adjusted block-by-block based on how full the previous block was (and is burned, permanently removed from circulation) and an optional "priority fee" (a tip to the validator to prioritize your transaction).
This design made fees more predictable than the older pure-auction model, though demand spikes — a popular NFT mint, a major market move — can still push gas prices sharply higher during short windows.
Layer 2 rollups exist largely to address this directly: by batching many transactions into one Ethereum-layer settlement, the base-layer gas cost gets spread across everyone in the batch, making individual transactions dramatically cheaper.
