A decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Ethereum introduced programmable money and transitioned from proof of work to proof of stake with The Merge in 2022. Its native currency is Ether (ETH).
Ethereum was proposed in late 2013 by Vitalik Buterin, a programmer and co-founder of Bitcoin Magazine, who envisioned a blockchain that could do far more than simple value transfers. Launched in July 2015, Ethereum introduced the concept of a "world computer" — a decentralized platform on which anyone could deploy smart contracts and build decentralized applications. This innovation unlocked entirely new categories of blockchain use cases including decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).
The Ethereum network underwent its most significant upgrade in September 2022 with The Merge, transitioning from an energy-intensive proof-of-work consensus mechanism to proof of stake. This change reduced Ethereum's energy consumption by approximately 99.95% and introduced staking as the primary means of securing the network. Validators must stake a minimum of 32 ETH to participate in block production, earning rewards for honest participation and facing slashing penalties for misbehavior.
Ethereum's fee market was fundamentally redesigned with EIP-1559 in August 2021, which introduced a base fee that is burned with every transaction rather than going entirely to miners. This burn mechanism has made ETH deflationary during periods of high network activity, meaning more ETH is destroyed than created. The combination of reduced issuance from proof of stake and the burn mechanism gave rise to the "ultrasound money" narrative among Ethereum supporters.
Today, Ethereum hosts the largest ecosystem of decentralized applications with billions of dollars in total value locked across DeFi protocols. Its roadmap focuses on scalability through layer-2 rollups, proto-danksharding (EIP-4844), and eventual full danksharding. The network supports a thriving developer community and remains the dominant smart contract platform by nearly every metric including developer activity, DeFi TVL, and NFT volume.
You can stake Ethereum by running your own validator node with 32 ETH, using a liquid staking protocol like Lido or Rocket Pool (no minimum), or staking through a centralized exchange. Liquid staking is the most popular option because it lets you receive a derivative token (like stETH) that you can use in DeFi while earning staking rewards.
Bitcoin is primarily a digital store of value and payment network, while Ethereum is a programmable platform for smart contracts and decentralized applications. Bitcoin uses proof of work; Ethereum uses proof of stake. Ethereum supports a much wider range of use cases including DeFi, NFTs, and DAOs, while Bitcoin focuses on security and monetary policy.
Ethereum is the second-largest cryptocurrency and the backbone of DeFi, NFTs, and Web3. Its value proposition rests on network effects, developer adoption, and the growing utility of smart contracts. Like all cryptocurrencies, ETH is volatile and carries risk. Investors should research thoroughly and consider their risk tolerance.
Gas fees are the costs paid to process transactions on Ethereum, denominated in gwei (a small unit of ETH). Fees vary based on network congestion and transaction complexity. High-demand periods can push fees up significantly, which is why many users rely on layer-2 solutions like Arbitrum and Optimism for cheaper transactions.
Ethereum 2.0 was the former name for Ethereum's series of upgrades including the transition to proof of stake (The Merge) and future scalability improvements. The Ethereum Foundation now discourages the term 'Ethereum 2.0' because the upgrades are happening incrementally rather than as a single release. Key remaining upgrades focus on sharding and data availability.
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A consensus mechanism where validators lock up (stake) their tokens as collateral to earn the right to validate transactions and create blocks. Validators are selected based on the amount staked and other factors, and can be penalized for malicious behavior. Proof of stake is significantly more energy-efficient than proof of work.
Smart ContractSelf-executing code deployed on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. Smart contracts eliminate the need for intermediaries and enable trustless, transparent transactions. They form the foundation of DeFi, NFTs, and other blockchain applications.
Gas FeeThe cost required to execute a transaction or smart contract operation on a blockchain like Ethereum. Gas fees compensate validators for the computational resources needed to process transactions. Fees fluctuate based on network congestion and the complexity of the operation.
Layer 2A secondary protocol built on top of a layer-1 blockchain to improve scalability and reduce transaction costs. Layer 2 solutions process transactions off the main chain and periodically settle them on layer 1 for security. Examples include Arbitrum, Optimism, and the Lightning Network.