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Last Updated: December 21, 2021

ETH, short for Ether, is the native token that drives the Ethereum network, an open source blockchain protocol. ETH provides utility to blockchain network participants by allowing them to spend it in order to send transactions on the Ethereum network.

The Ethereum network is designed to operate as a global virtual machine, facilitating a wide range of platforms, applications, and associated ecosystems. The Ethereum network is a Turing complete virtual machine. It operates with decentralized collections of code that automate self-executing agreements, known as smart contracts, that can be deployed to an address and interacted with.


The Ethereum Public Blockchain was launched in July 2015 as part of a collaborative development effort spearheaded by Vitalik Buterin. In 2016, the community voted to fork the Ethereum blockchain to reverse an exploited flaw in the system code of a third-party project called The DAO. In the years since, ETH has become one of the most widely-traded digital assets.

Solidity-based smart contracts on the Ethereum network provide a decentralized layer of functionality to blockchain applications and integrations. On the Ethereum Public Blockchain, multiple smart contracts are capable of working together as a decentralized application, or dApp.

These tools enable organizations to create their own custom assets and govern them via automated, code-enforced processes. As a result, Ethereum has provided a foundation for an assortment of digital assets to be created, the associated markets of which comprise a growing ecosystem of traders, platforms, and instruments.



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What is ETH’s place in the ecosystem


Since its launch, there have been several updates to the system’s stability to help accommodate more network uses and increase transaction throughput. Scalability research continues to be a high priority for Ethereum development, with numerous teams and individuals currently working towards a viable solution.


The Ethereum Public Blockchain supports around 20 transactions per second, averaging a 5-minute confirmation time until block finality.


The Ethereum Public Blockchain serves as the basis for a number of digital asset instruments that operate through the network’s infrastructure. Examples of Decentralized Finance (DeFi) platforms operating off of Ethereum include, MarkerDAO, Compound Finance, and Uniswap.


The Ethereum Public Blockchain’s governance mechanism is designed to disincentivize attacks as the cost of hardware and energy to do so would far outweigh any potential gains. While Ethereum’s network architecture shields against external threats, account custody and smart contract security are largely managed by users and developers respectively.


The Ethereum network was initially launched utilizing a proof-of-work (PoW) based consensus mechanism consisting of mining pools and hash power. Current research is focused on more resource-efficient, proof-of-stake (PoS) based consensus models for the Ethereum blockchain.

Under the current PoW governance model, network participants, known as miners, operate specially-designed computer rigs. Miners solve complex math problems that cryptographically secure transaction blocks, confirming them to the blockchain. As a reward, miners receive gas and network fees in the form of ETH tokens. Miners can form collectives in order to win the right to mine the next transaction block. When a group of miners wins, each participant receives a share of the block rewards equivalent to the hash power they provided to the mining pool.

The Ethereum Improvement Proposal (EIP) 1559 introduced changes to the Ethereum fee market, replacing the current gas limit with two values: a long-term average target value equal to the current gas limit and a hard per-block cap that is twice the gas limit. In addition, EIP 1559 introduced a base fee that must be paid by all transactions. The base fee is subsequently burned, and it adjusts on a block-by-block basis, with the intention of keeping average gas costs per block as close as possible to the current gas limit.

The future Ethereum 2.0 PoS governance model will allow network participants to stake 32 ETH to become a validator. Validators are chosen at random to create transaction blocks and confirm the blocks of other validators. Deviating from codified best practices may activate slashing conditions that cause a validator to forfeit their staked ETH.


The Ethereum Public Blockchain often serves as a proving ground for innovative protocols. The network allows for direct transfers between accounts via a decentralized infrastructure, where participants retain custody of their digital assets without third-party control or intervention.


Since the Ethereum network functions as a virtual machine, it provides a blockchain foundation for developers to deploy decentralized applications. The code for the network is open source and has established libraries of resources for newcomers and veterans to reference and build.

The Ethereum Foundation continues to support the development community with resources, including tutorials and documentation. Ethereum developers participate in regularly-scheduled public meetings to discuss the ongoing platform development roadmap.


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