Ethereum is the first open-source, public blockchain with smart contract functionality. The developer community uses ETH to build its own blockchains and apps. Ethereum is part of practically every innovation in blockchain.

If Bitcoin is digital gold, Ethereum could be compared to digital silver. Both coins dominate nearly 50% of the entire cryptocurrency market. Some believe Ethereum might flip Bitcoin’s market cap someday, hence why many hold this currency as a long-term investment.

But make no mistake. ETH is NOT a store of value. It’s a utility token, and what makes it valuable is the work you can do with it.

More like digital oil.

Formally, ETHis a virtual, decentralized, and autonomous computer network. This means:

• Nobody owns Ethereum. It’s peer-to-peer, user-to-user.
• Anyone with an online computer can connect to Ethereum to receive or give computing power.
• The more computers use ETH around the world, the harder it is to manipulate.

It’s empowering because developers no longer need to trust their business to some IT company. Ethereum allows users to safely buy and sell computing power to other users directly. Because it’s worldwide available (and also the pioneer in smart contracts), it has become the largest host of blockchain projects.

That’s self-reinforcing, because developers create tools for each other, saving time and money. Which allows us to create more practical apps for everyday people. This brings more users to the Ethereum app marketplace, which attracts even more developers.

From 2015 to 2022, over 2,700 apps were built on Ethereum. That figure has grown substantially since then as the ecosystem expanded through DeFi, NFT, and Layer 2 development.

Ethereum vs. Competitors: Quick Comparison

👉 Quick takeaway: Ethereum leads on decentralization, L2 ecosystem depth, and track record. Solana leads on raw speed and the lowest mainnet fees. BNB Chain offers low fees with a tradeoff in decentralization. Avalanche sits between Ethereum and BNB Chain on most dimensions.

The tradeoff is clear. Ethereum is slower and more expensive on mainnet than most competitors. Its advantage is the Layer 2 ecosystem, the size of its developer community, and its decentralization. If you need the cheapest possible mainnet fees right now, Solana or BNB Chain win. If you need the largest DeFi ecosystem and the deepest security guarantees, Ethereum wins.

How Does Ethereum Work?

The goal of Ethereum is to give users more control of their data by running apps on the blockchain. While there are many complicated ways to achieve this, using Ethereum is simple:

1. Pick a wallet
2. Buy ETH
3. Pick a dApp
4. Confirm

Here’s an example of what it looks like for a complete beginner in crypto. Let’s say you want to buy a coin that’s only available on the Ethereum blockchain (they’re called ERC-20 tokens). To do this, you need to buy Ether and use two dApps: a wallet, and a Decentralized Exchange (DEX).

1. To buy ETH, go to any platform that sells cryptocurrency. e.g., Go to Binance and buy with a bank account or other payment methods
2. Once you’ve bought some ETH, you then install a “Web3” wallet like Metamask. Click Create Wallet, save the secret phrase, create a password, and you’re good to go.
3. Above your Metamask balance, you’ll see the network (Ethereum Mainnet), account name, and public address. Copy this address to send ETH from Binance (or wherever you bought it).
4. Return to your balance in Binance, find the option to Withdraw/Send Crypto, and select Ethereum. To fill out the fields, paste the address you copied, select ERC-20 as the network, and complete the security steps.
5. Once the ETH arrives at your Metamask wallet, you can now visit DEXs like Uniswap.
6. Click on Launch App to open the Uniswap dApp. Click Connect Wallet and accept permissions from the Metamask pop-up
7. From the swap drop-down, find the coin you want to exchange for ETH. If it doesn’t show, you’ll have to paste the token contract instead. You can copy that by searching your token on CoinMarketCap. The address appears near the top under “Contracts:” with the ETH logo.
8. After you select both coins and amounts, click Approve on Metamask to enable the token. Then click Swap to preview the order on Metamask.
9. The window will show your exchange rate plus network fees (also called gas fees). It’s recommended to always have some ETH in balance for fees. Click Confirm to exchange ETH for the other coin.
10. You can now see the transaction status on Metamask. Depending on network congestion, you receive the new token in a few minutes or hours.

You just used a dApp built on Ethereum. And there are dApps for so much more: lending, gaming, browsing, betting, even voting.

Why Is Ethereum So Popular?

Have you wondered what makes Ethereum consistently rank in the Top 3 coins for nearly a decade? Part of the answer is the same reason Bitcoin keeps dominating. These projects are first-movers in blockchain currencies and utility.

Knowing that most modern blockchains launched after 2018, Ethereum has spent an extra 3 years in the market and 5 years in development. Because developers want to be in the largest blockchain marketplace, Ethereum has stayed popular. But for how long?

Modern networks are faster and cheaper, which makes them gain users faster than Ethereum. These new blockchains will likely become the new smart-contract leader, whether it’s Ethereum forks, Layer 2s, or competitor networks. Yet, that doesn’t make ETH anything less than a blue-chip project.

Ethereum vs Bitcoin

You may also wonder: If Ethereum is such an old project with more utility, why is it less dominant than Bitcoin? Short answer: they’re very different. Long answer:

• ETH has a higher max supply of ~120M. Maybe Ether would be pricier than Bitcoin if supply were also 21M, although that would limit its utility. Ethereum’s flexible cap has been increasing every year.
• Bitcoin is expensive because people treat it like an investment and store of value. Ethereum is a utility token like the oil that fuels machines. It’s not meant to be held but spent on programs unless those apps are yield farming platforms.
• Bitcoin and Ethereum approach security differently. Bitcoin uses proof-of-work, where security comes from raw computational power and energy expenditure. Ethereum uses proof-of-stake, where security comes from validators locking up ETH as collateral. If a validator acts dishonestly, they lose their staked ETH. The two mechanisms have different security assumptions, not a simple hierarchy. Most cryptographic researchers do not consider proof-of-stake categorically less secure than proof-of-work at Ethereum’s current validator count.

What sets Ethereum apart is the ecosystem created by the developer community.

What Is EIP-4844 and Why Did It Cut Layer 2 Fees?

Before March 2024, Layer 2 rollups posted transaction data to Ethereum as permanent calldata. Expensive. Every byte stayed on-chain forever, and users paid for that storage.

EIP-4844 changed the model. It introduced a new transaction type that carries data in temporary blobs. These blobs are attached to blocks for roughly 18 days, then pruned. Rollups only need the data long enough for fraud proofs or validity proofs to settle. They do not need it forever.

The practical result: Layer 2 fees dropped sharply after the Dencun upgrade activated EIP-4844 in March 2024. Some rollups saw transaction costs fall by 80% or more in the weeks following activation.

Proto-danksharding vs. full danksharding: EIP-4844 is the first step. Proto-danksharding introduces the blob format and the fee market for blob data. Full danksharding, planned for a later upgrade, would expand blob capacity by orders of magnitude using data availability sampling, allowing thousands of rollups to post data cheaply at scale.

For now, blob capacity continues to grow. Ethereum bumped the blob target ahead of the Fusaka upgrade, signaling that scaling Layer 2 data availability remains the top near-term priority.

Ethereum Layer 2 Comparison: Which Network Should You Use?

Layer 2 rollups run on top of Ethereum and inherit its security. They process transactions off the main chain and post compressed proofs back to Ethereum. After EIP-4844, the cost of posting that data dropped substantially.

Here is how the main options compare:

👉 Quick takeaway: Base offers the lowest fees in the table and is the strongest choice for consumer apps and Coinbase users. Arbitrum and Optimism lead on DeFi ecosystem depth. zkSync and Polygon zkEVM offer ZK proof security for transfers and developers already in the Polygon ecosystem.

Note: Fees fluctuate with network congestion. Figures above reflect typical post-EIP-4844 conditions and should be verified before transacting.

How to choose: If you are using DeFi apps and want the deepest liquidity, Arbitrum One has the largest TVL among L2s. If you are building or using Coinbase products, Base is the natural fit. If you are moving large sums and want ZK-proof security guarantees, zkSync Era or Polygon zkEVM are worth the slightly higher fees.

All of these networks settle on Ethereum mainnet. Your assets remain under Ethereum-level security even when transacting on L2.

How to Stake Ethereum: Three Options Compared

Staking withdrawals went live with the Shanghai-Capella upgrade. That removed the biggest barrier to staking: the fear of locking ETH indefinitely. Today, validators can exit their positions and withdraw both rewards and principal.

You have three main paths:

1. Solo staking (32 ETH required): You run your own validator node. You keep 100% of rewards. You take on the technical responsibility of keeping your node online. Downtime results in small penalties. This is the most trustless option.

2. Staking pools (any amount): Platforms like Lido or Rocket Pool let you stake any amount of ETH. They pool funds across many validators. You receive a liquid staking token (like stETH or rETH) that earns rewards and can be used in DeFi. Lido charges a 10% fee on rewards. Rocket Pool charges 14% on the commission side, though its structure differs.

3. Exchange staking (any amount): Centralized exchanges like Coinbase or Binance offer staking with a simple interface. Fees are higher, typically 25 to 35% of rewards. You give up custody of your ETH.

Which should you choose? If you have 32 ETH and technical confidence, solo staking maximizes returns. If you have less than 32 ETH and want to stay in DeFi, a liquid staking protocol gives you flexibility. If you want the simplest option and do not mind the fee, exchange staking works.

Staking withdrawals are now enabled, so you are not locked in permanently regardless of which path you choose.

What’s the Ethereum Ecosystem?

Ethereum offers the infrastructure for blockchain platforms. The better the infrastructure, the more developers will build on it. This creates a loop where newer platforms add to Ether’s utility.

It’s hard to draw the line of where the Ethereum ecosystem ends because everything is becoming interconnected. Many blockchains were created on Ethereum, so each of their ecosystems is also part of ETH. That includes Ethereum alternative versions (forks like Pulsechain), Layer-2 blockchains (e.g., Polygon), and networks built on Ethereum’s Virtual Machine (EVM) like BNB Chain.

To make it more complex, Ethereum can also interact with incompatible blockchains by using relay chains (PolkaDot), cross-chain networks (Avalanche), and oracles (ChainLink). Popular projects from other blockchains eventually create ERC-20 token versions for more exposure. And if we’re talking of Ethereum DeFi dApps, there might be dozens of liquidity-pool tokens on every exchange.

For a simplified version, the Ethereum ecosystem is:

• The ETH token for Ethereum’s blockchain
• Utility tokens from every dApp listed publicly. While it’s mostly ERC-20 tokens, platforms can use different standards based on their purpose (e.g., ERC-721 for NFTs).
• Ethereum Layer 2 blockchains and their cryptocurrency
• Ethereum’s off-chain governance via DAOs, online forums, and improvement proposals
• Validator software services and delegated ETH2 staking providers

If you’re the majority of people (who aren’t developers), the ecosystem is simplified to a handful of dApps. Let’s see the most relatable use cases.

What Are the Use Cases of Ethereum?

3,000 dApps isn’t that much when you realize that most of them are practically identical. There are six clear use cases, the most popular being DeFi services:

DeFi Services

Because Web3 dApps are a transactional Internet layer, most of the development and ETH allocation goes to financial services:

• Decentralized wallets
• Multi-signature vaults
• Yield farming platforms
• Staking and Lending protocols (e.g., LiquidLoans)
• Play-to-Earn Game Finance
• Decentralized Exchanges
• NFT Marketplaces
• Betting

The rise of DeFi in 2020 led to a massive price surge in Ethereum. You might think that passive crypto would lead to inflation and lower prices. Instead, ETH increased its floor price because DeFi created new businesses, and people don’t want to sell when they’re earning.

Stablecoins

Both the blockchain and DeFi dApps increased liquidity with the creation of stablecoins. Ethereum’s smart contracts allow programming tokens to peg prices to fiat currencies, either with collaterals or supply algorithms. So while investors might be selling Ethereum, they’re still holding Ethereum tokens like USDC, USDL, and DAI.

DeFi platforms soon expanded to stablecoin services, allowing users to:

• Reduce risk on liquidity pools
• Reduce fees when buying back ERC-20 tokens
• Lock tokens in protocols and receive temporary liquidity tokens in exchange
• Earn from fees and liquidations by contributing to “stability” pools

Ironically, the next use case is the opposite of stablecoins.

NFTs

NFTs are non-fungible ERC-721 tokens that can only be traded for ERC-20 tokens or ETH. Because there can only be one, they’re linked to digital assets and considered collectibles. They’re illiquid assets that only sell when collectors find them valuable, which makes them volatile and speculative.

By now there might be more NFTs than tokens. These marketplaces have been around since 2017, even on Solana. But because Ethereum has the largest ecosystem, it became the first to popularize them by 2021 (especially on Opensea).

As a new exchange means, NFTs have their own use cases, including digital art, domain tokenization, and in-game assets.

DAOs

Decentralized Autonomous Organizations are free-to-join companies with flat hierarchies. These can both be off-chain (for informal community discussions) and on-chain (for voting decisions via staking and randomness). There’s no central authority, which in theory gives all users the opportunity to make governance decisions.

Some believe that DAOs make platforms better, some believe there shouldn’t be any governance. They’re controversial because:

• The largest contributors have the most voting influence. Eventually, they dominate the Governance and set rules that don’t benefit the whole.
• When there are uncapped staking rewards, these contributors earn faster than smaller ones. Once a user has more power than 50% of the network, you can’t guarantee decentralization or security.
• DAOs have unclear legal definitions. When things go wrong, no one is held liable for people’s losses.

The most successful one is MakerDAO.

Human-Readable Addresses

Human-readable addresses are easier to remember and useful for creating digital identities. We use usernames instead of IDs, domains instead of IP addresses, and seed phrases instead of numbers. Now, it’s possible to replace your public wallet address with a custom name using the Ethereum Name Service (ENS).

You can buy, say, Satoshi.eth and link it to your address just like NFTs are linked to pictures. You can send crypto to Satoshi.eth instead of pasting the full address. Depending on the name provider, you might sell, rent, or use these names on websites. We could also use them for hiding public addresses for privacy.

Enhanced Web Browsers

An example of Ethereum applied to browsing is the Brave browser. Brave has an ERC-20 token called Basic Attention Token (BAT), which offers a different approach to digital advertising and privacy. Users earn BAT for watching non-intrusive ads, which they can then cash out, stake, or donate to support their favorite creators.

Brave browser distributes 70% of ad revenue among users in BAT. Users also like this platform because it’s light, efficient, and has built-in blockers for privacy-invasive ads and trackers.

The History of Ethereum

Often when projects become successful, they branch out into other spaces: NFTs, DeFi, play-to-earn, metaverse. These innovations broaden Ethereum’s utility but also its definition, which makes it more confusing for beginners. To understand where all these come from, it helps to go back and see where Ethereum started (and why it even exists):

The Rise Of Ethereum (2013 – 2020)

Vitalik Buterin might be the most famous person in crypto besides Satoshi. He founded Ethereum in 2013 with Gavin Wood, Charles Hoskinson, and Joseph Lubin, who later founded PolkaDot, Cardano, and Consensys respectively. But it didn’t happen overnight: the idea was 2-4 years in the making.

Vitalik first joined crypto when co-founding the Bitcoin magazine after the coin’s launch in 2011. He then realized Bitcoin had limited use and wondered “what else can cryptocurrencies be used for?”. Then, they developed throughout 2013, raised $16M in Ethereum’s ICO ($0.31 per coin), and launched in July 2015.

It was a proof-of-work blockchain with a max supply of 60M ETH (now 120M+). One update after another, Ethereum was becoming more accessible and steadily increasing traffic. Which led to the problems we’re dealing with today.

Ethereum isn’t scalable enough and it’s immutable. The simplest way to improve the blockchain is by creating alternate versions (forks). Ethereum has seen 100+ forks since 2015, such as Ice Age (2015), the famous DAO fork (which created Ethereum Classic, ETC), and the most recent one, Pulsechain.

To address scalability, Ethereum began planning a shift to proof-of-stake. That process started with the Beacon Chain in 2020 and completed with the Merge in September 2022.

From Beacon Chain to the Merge (2020 to 2022)

Ethereum’s shift away from proof-of-work did not happen in one day. It took nearly two years.

Phase 0 launched the Beacon Chain in December 2020. This was a separate proof-of-stake chain running in parallel with the original proof-of-work network. Validators began staking ETH and earning rewards, but the two chains did not yet share the same transaction history.

The Merge completed in September 2022. At that point, the Beacon Chain became Ethereum’s consensus layer and proof-of-work mining was turned off permanently. Energy consumption dropped by roughly 99% overnight.

The ‘ETH 2.0’ label was officially retired around this time. Ethereum developers stopped using it to avoid the misleading implication that a single upgrade would solve all scalability problems. The network has continued upgrading through a rolling release schedule ever since.

By May 2025, Ethereum averaged roughly $42 billion in daily trading volume, reflecting the liquidity growth that followed the Merge and subsequent DeFi expansion.

The Ethereum Upgrade Roadmap: What Has Happened and What Is Next

Ethereum does not upgrade in one single leap. It follows a rolling sequence of protocol changes, each building on the last. Here is where things stand.

Completed upgrades:

• The Merge (September 2022): Ethereum switched from proof-of-work to proof-of-stake, cutting energy consumption by roughly 99%.
• Shanghai-Capella (2023): Staking withdrawals went live. Validators could finally unlock staked ETH, a feature that had been locked since the Beacon Chain launched in 2020.
• Dencun (March 2024): Introduced EIP-4844 (proto-danksharding) and blob-carrying transactions. Layer 2 fees dropped significantly because rollups could post data in cheaper temporary blobs instead of expensive permanent calldata.
• Pectra (May 7, 2025): Activated on mainnet. Described by analysts as the most consequential protocol milestone since the Merge. Pectra improved staking economics and laid groundwork for the next wave of UX improvements.

Upcoming upgrades:

• Fusaka: Ethereum bumped blob capacity in January 2026 as preparation for this upgrade, which continues the data-availability scaling work started by EIP-4844.
• Glamsterdam and Hegota: Further protocol optimizations on the roadmap for 2026 and beyond.
• Finality in seconds by 2029: The Ethereum Foundation published its most ambitious roadmap in years in February 2026, targeting single-slot finality that would reduce confirmation time from roughly 15 minutes to seconds.

The old ‘ETH 2.0’ label is no longer used. There is no single destination upgrade. Instead, Ethereum ships improvements continuously.

Problems With Ethereum

If you wonder why Ethereum has to be so complicated, it’s because there’s no easy solution for scalability on large networks. Replacing old methods is hard because blockchains are immutable, and thousands of dApps rely on that infrastructure. Because a lot of money is at stake, it takes a long time to bring new versions and test their security.

If Ethereum had no problems, there wouldn’t be as many alternative blockchains and forks. But most issues would go away if Ethereum solved just this one:

Low Scalability

While other blockchains are more scalable, they don’t nearly have the network volume of Ethereum. The blockchain trilemma limits the ability for blockchains to fulfill ALL the necessary features for functionality. For a better perspective:

• Bitcoin has 1.5x to 2x more daily volume and roughly 300k transactions per day
• Ethereum crossed 300K in 2017. Today’s average transaction number is 1.2M, not including the ecosystem.
• Bitcoin has a block time of 10 minutes. Scalability should be a bigger problem than Ethereum’s, but it’s not.
• Ethereum confirms blocks in roughly 12 seconds on mainnet. Layer 2 networks settle transactions faster and more cheaply by batching activity off-chain and posting proofs back to Ethereum. PulseChain is a separate fork with its own 3-second block time, not a change to Ethereum mainnet.

It’s not problematic for Bitcoin because, for most people, it’s a long-time investment made in a few purchases. But smart contracts use Ether every day. Some use cases (like play-to-earn) might sign hundreds of transactions per minute, and there are over 3,000 dApps.

Emerging Pressures: Quantum Computing and AI

Two longer-term threats have entered Ethereum’s planning horizon.

Quantum computing: Current Ethereum addresses use elliptic-curve cryptography. A sufficiently powerful quantum computer could theoretically derive private keys from public ones. The Ethereum Foundation is actively researching quantum-resistant cryptography as part of its 2026 and beyond roadmap work. No timeline for a mandatory migration exists yet, but the threat is taken seriously enough to appear in official roadmap discussions.

AI integration: Ethereum is increasingly discussed as a potential ‘trust layer’ for AI systems, where on-chain verification could confirm whether AI outputs were produced honestly or tampered with. This is early-stage thinking. No major Ethereum protocol change specifically targets AI integration as of early 2026, but it is a recurring theme in Ethereum Foundation communications and research.

How Much Do Gas Fees Actually Cost?

Gas fees on Ethereum mainnet remain higher than Layer 2 alternatives. Here is what typical actions cost at moderate congestion levels in 2025:

👉 Quick takeaway: Layer 2 networks reduce transaction costs by 95–97%+ across every common action. A swap that costs $20 on Ethereum mainnet costs under $0.20 on Arbitrum. For any regular DeFi user, the case for moving activity to L2 is almost entirely economic.

Fees spike during high-demand periods. The 2021 NFT boom pushed simple swaps above $200 on mainnet. EIP-4844 did not reduce mainnet fees directly. It reduced the cost for Layer 2 networks to post their data to Ethereum, which is why L2 fees fell while mainnet fees remained similar.

If your transaction is below $500 in value, using a Layer 2 network is almost always the better choice on fees alone.

Top Projects On Ethereum

It’s hard to keep track of the hundreds of different apps. But unless you’re a developer, you don’t need that many. Only a wallet, exchange (or NFT marketplace if you own any), and an interest-earning platform.

As a starter, you can’t go wrong with these:

Metamask

Metamask is the most used WEB3 wallet for mobile and browsers. It can hold hundreds of tokens and NFTs from multiple networks like Ethereum. Web3 wallets are worldwide available and a must-have, as you can’t connect to dApps without one.

Uniswap

Uniswap is the most widely used decentralized exchange for ERC-20 tokens. TVL and daily volume figures change frequently. Check DeFiLlama or the Uniswap app directly for current numbers before making trading decisions.

Opensea

OpenSea was the dominant NFT marketplace on Ethereum through the 2021 to 2022 NFT boom. The NFT market has contracted significantly since then, and OpenSea’s volume and user figures have changed substantially. Check current rankings on DappRadar for up-to-date figures.

Ethereum in a Nutshell

Ethereum is the infrastructure layer that most of crypto runs on. Developers build on it because it has the deepest tooling, the largest developer community, and a decade of battle-tested security.

The scalability story has changed. Four years ago, the main question was whether Ethereum could scale without sacrificing decentralization. Today, Layer 2 networks handle the volume. EIP-4844 made posting data to Ethereum cheap enough that rollups can pass those savings to users. The Pectra upgrade in May 2025 addressed staking economics. The Fusaka upgrade continues the data-availability work.

The 2029 finality roadmap is the most ambitious target Ethereum has set. If the Ethereum Foundation delivers single-slot finality, confirmation times drop from 15 minutes to seconds. That closes the last major gap between Ethereum and faster-but-more-centralized competitors.

Scalability problems are not solved. They are being solved, systematically, one upgrade at a time.

FAQ

What Is an Ethereum Wallet?

The Ethereum wallet is a dApp built on Ethereum that allows you to send funds and manage a balance on the ERC-20 network. Most Web3 wallets support it by default because they’re EVM compatible. You know it’s an Ethereum wallet when you can connect it to Ethereum dApps.

Can I Buy ETH Outside the Ethereum Blockchain?

If you’re using custodial wallets or centralized exchanges, Ethereum will be available regardless of the network. Out of all the mobile apps, you can use to buy crypto, almost all offer Ethereum. You can indirectly buy Ethereum on other networks via pegged tokens like Wrapped Ether (1 WETH = ~1 ETH).

How High Will Ethereum Go?

Because Ethereum has no maximum supply, there might be no price limit. The problems that come with that are token inflation, lower scalability, or higher network fees. If Ethereum can solve those problems before other competitors do, it’s reasonable to expect a $10,000+ Ethereum within a few years.

What is EIP-4844 and how did it affect gas fees?

EIP-4844, activated in March 2024 as part of the Dencun upgrade, introduced blob-carrying transactions. Rollups now post transaction data in temporary blobs rather than permanent calldata. This cut Layer 2 fees by 80% or more on many networks. Mainnet fees were not directly affected.

Are staking withdrawals available on Ethereum?

Yes. The Shanghai-Capella upgrade unlocked staking withdrawals. Validators can now exit their positions and withdraw both rewards and principal. You are no longer locked in indefinitely when you stake ETH.

What is the Pectra upgrade?

Pectra activated on Ethereum mainnet on May 7, 2025. It is considered the most significant protocol upgrade since the Merge. Pectra improved staking economics, validator UX, and laid foundations for subsequent upgrades including Fusaka.

What is the Ethereum Foundation’s finality roadmap?

In February 2026, the Ethereum Foundation published a roadmap targeting single-slot finality by 2029. The goal is to reduce transaction confirmation from the current ~15 minutes to seconds, making Ethereum competitive with faster chains for time-sensitive applications.