What is ETH?
Ethereum is a decentralized blockchain platform that enables programmable smart contracts and decentralized applications (dApps). These technologies support innovations like decentralized finance (DeFi), non-fungible tokens (NFTs), and tokenized assets.
- Purpose: Provides a global platform for applications that don’t rely on trust or censorship.
- Technology: Uses a proof-of-stake system and the Ethereum Virtual Machine (EVM) to run programs.
- Ecosystem: Hosts 60% of DeFi’s value and supports real-world uses like institutional asset tokenization.
Deep Dive
1. Purpose & Value Proposition
Ethereum was created to expand blockchain beyond just payments by introducing smart contracts—self-executing agreements that run without middlemen. This allows developers to build decentralized systems for finance (DeFi), digital ownership (NFTs), governance (DAOs), and more. Unlike Bitcoin, Ethereum focuses on programmability, acting as a “world computer” for open, global applications.
2. Technology & Architecture
Since "The Merge" in 2022, Ethereum uses a proof-of-stake consensus method, which cuts energy use by 99.95%. Its Ethereum Virtual Machine (EVM) standardizes how smart contracts run, making them compatible across different blockchains. Upcoming upgrades like Proto-Danksharding (EIP-4844) and Pectra (expected in 2025) aim to improve scalability and reduce costs for Layer-2 solutions such as Arbitrum and Optimism.
3. Ecosystem & Use Cases
Ethereum’s ecosystem includes:
- DeFi: Over $83 billion locked in protocols like Uniswap and Aave.
- NFTs: More than $250 billion in sales, supporting digital art, gaming, and intellectual property ownership.
- Enterprise adoption: Companies like JPMorgan, BlackRock, and Stripe use Ethereum for stablecoins, tokenized assets, and payments.
Layer-2 networks handle about 250 transactions per second, compared to Ethereum’s base layer (~15 TPS), making it more practical for everyday use.
Conclusion
Ethereum combines decentralized security with programmability, making it a key foundation for Web3. Its ongoing upgrades and strong developer community suggest it will remain important, though challenges like scaling and regulatory clarity persist. How might Ethereum’s role evolve as competing blockchains and institutional adoption change the landscape?