WHAT IS GAS? Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network. Since each Ethereum transaction requires computational resources to execute, each transaction requires a fee. Gas refers to the fee required to successfully conduct a transaction on Ethereum.

In essence, gas fees are paid in Ethereum's native currency, ether (ETH). Gas prices are denoted in gwei, which itself is a denomination of ETH - each gwei is equal to 0.000000001 ETH (10-9 ETH). For example, instead of saying that your gas costs 0.000000001 ether, you can say your gas costs 1 gwei.

Let's say Alice has to pay Bob 1ETH. In the transaction the gas limit is 21,000 units and the gas price is 200 gwei. Total fee will be: Gas units (limit) * Gas price per unit i.e 21,000 * 200 = 4,200,000 gwei or 0.0042 ETH. Now, when Alice sends the money, 1.0042 ETH will be deducted from Alice's account. Bob will be credited 1.0000 ETH. Miner gets 0.0042 ETH.

WHY DO GAS FEES EXIST? In short, gas fees help keep the Ethereum network secure. By requiring a fee for every computation executed on the network, we prevent actors from spamming the network. In order to prevent accidental or hostile infinite loops or other computational wastage in code, each transaction is required to set a limit to how many computational steps of code execution it can use. The fundamental unit of computation is "gas". Although a transaction includes a limit, any gas not used in a transaction is returned to the user.

WHAT IS GAS LIMIT? Gas limit refers to the maximum amount of gas you are willing to consume on a transaction. More complicated transactions, involving smart contracts, require more computational work so they require a higher gas limit than a simple payment. A standard ETH transfer requires a gas limit of 21,000 units of gas. For example if you put a gas limit of 50,000 for a simple ETH transfer, the EVM would consume 21,000, and you would get back the remaining 29,000. However, if you specify too little gas say for example, a gas limit of 20,000 for a simple ETH transfer, the EVM will consume your 20,000 gas units attempting to fulfill the txn, but it will not complete. The EVM then reverts any changes, but since 20k gas units worth of work has already been done by the miner, that gas is consumed.

WHAT IS GAS PRICE? Gas price refers to the amount of ether you are willing to pay for every unit of gas, and this is usually measured in 'gwei'.

CAN GAS FEES GET SO HIGH? High gas fees are due to the popularity of Ethereum. Performing any operation on Ethereum requires consuming gas, and gas space is limited per block. This includes calculations, storing or manipulating data, or transferring tokens, each consuming different amounts of "gas" units. As dapp functionality grows more complex, the number of operations a smart contract performs grows too, meaning each transaction takes up more space of a limited size block. If there's too much demand, users must offer a higher gas price to try and out-bid other users' transactions. A higher price can make it more likely that your transaction will get into the next block. Gas price alone does not actually determine how much we have to pay for a particular transaction. To calculate the transaction fee we have to multiply the gas used by gas price, which is measured in gwei.