Ethereum (ETH)

Ethereum is an open blockchain that can run programs, and ether (ETH) is its native cryptocurrency. Where Bitcoin focuses on moving value, Ethereum lets developers build applications such as exchanges, lending markets, stablecoins and games directly on-chain. Proposed by Vitalik Buterin in 2013, the network launched on 30 July 2015 and quickly became the most widely used platform for crypto applications.

How does Ethereum work?

Ethereum is built around smart contracts: programs that execute automatically when their conditions are met. They run on the Ethereum Virtual Machine (EVM), and every node on the network verifies that each contract produced the same result. Stablecoins like USDC, decentralised exchanges like Uniswap and most NFT collections all rely on this infrastructure.

In September 2022, an upgrade known as “The Merge” switched Ethereum from mining (proof-of-work) to proof-of-stake. Blocks are now proposed and attested by validators who lock up at least 32 ETH. The change cut the network’s energy use by roughly 99.9%. A new block is produced every 12 seconds.

Ethereum uses an account-based model: every address has an ETH balance, and contract accounts also store code and data. The same 0x address works on other Ethereum-compatible networks, but balances do not move between them on their own. When withdrawing ETH from an exchange or sending tokens to a wallet, make sure the right network is selected.

What is ETH used for?

• Gas fees: every transaction and contract call on Ethereum is paid for in ETH. Our gas fee guide explains how the cost is calculated.
• Staking: holders can run a validator or use a service to stake ETH, helping secure the network in exchange for rewards.
• DeFi collateral: ETH is the most widely used collateral in lending protocols and decentralised exchanges.
• Layer 2 networks: rollups such as Arbitrum, Optimism and Base also typically charge fees in ETH. See our guide to Layer 2.

How is ETH supply determined?

Unlike Bitcoin, ETH has no fixed maximum supply. New ether is issued to validators as rewards. At the same time, the London upgrade of August 2021 (EIP-1559) introduced a burn: the base fee of every transaction is destroyed. When the network is busy, more ETH can be burned than issued and supply shrinks; when activity is quiet, supply grows slowly. ETH’s net inflation therefore depends on how heavily the network is used.

Key milestones

• 2016: after the DAO hack, a hard fork split the chain; the original version continued as Ethereum Classic (ETC).
• 2021: the London upgrade began burning fees.
• 2022: The Merge moved Ethereum to proof-of-stake.
• 2023: the Shanghai/Capella upgrade allowed staked ETH to be withdrawn.
• 2024: the Dencun upgrade added “blob” data space (EIP-4844), sharply lowering Layer 2 fees. US spot Ether ETFs also began trading that year.
• 2025: the Pectra upgrade raised the maximum balance per validator and gave ordinary wallets smart-account features.

What are the risks of Ethereum?

ETH is volatile. Even if the base network is secure, applications built on it can have bugs, be exploited or be outright malicious, and token approvals you grant to a contract can be abused. Staking adds its own layers of risk: the provider, liquid staking tokens and withdrawal queues. When moving funds to a Layer 2, you need to pick the right network and use official bridges. Mainnet fees can also spike during busy periods.

How to read ETH market data

Because ETH has no maximum supply, that field in the data table may be empty; to judge supply trends you need to weigh issuance against the amount burned. Market cap shows the overall size of the asset and 24-hour volume shows trading activity. On-chain figures such as total value locked or transaction counts tell you how much the network is used, but they do not map directly onto the ETH price.

Official sources

• Ethereum: ether and use cases
• Ethereum: staking options
• Ethereum: transaction fees
• Ethereum: Layer 2 networks