Ethereum

Ethereum is an open-source blockchain platform for smart contracts and decentralized applications. Where Bitcoin focuses on being digital money, Ethereum works as a programmable settlement layer: developers can deploy self-executing code that powers financial protocols, NFT marketplaces, games, and other services without a central operator. ETH, its native currency, is used to pay transaction fees and secure the network.

Ethereum was proposed by Vitalik Buterin and launched on 30 July 2015 after a public crowdsale. It introduced the Ethereum Virtual Machine (EVM), a shared runtime that executes smart contracts identically across every node in the network. The EVM has since become a de facto standard, with many other blockchains adopting compatibility with it.

How Ethereum works

Since September 2022, when the network completed its transition known as "The Merge", Ethereum has used Proof of Stake consensus. Validators lock up ETH as collateral to propose and attest to blocks, earning rewards for honest participation and risking penalties for misbehavior. The switch from mining cut the network's energy consumption by over 99%. ETH has no fixed maximum supply; instead, the EIP-1559 fee mechanism burns a portion of every transaction fee, which offsets new issuance and can make supply growth flat or negative during busy periods.

Role in the ecosystem

Ethereum hosts the largest ecosystem of decentralized finance (DeFi) applications, stablecoins, and NFTs, and it anchors a growing set of Layer 2 networks that process transactions cheaply and settle back to Ethereum for security. Its combination of a large developer community, deep liquidity, and battle-tested infrastructure makes it the primary platform for on-chain applications.