Ethereum

Ethereum is a decentralized computing platform launched in 2015 that lets developers deploy smart contracts and applications on-chain. Its native asset, ether (ETH), pays for computation and secures the network through staking. Beyond simple payments, Ethereum underpins decentralized finance, stablecoins, tokenized assets and a large layer-2 ecosystem. It is the second-largest cryptocurrency and the settlement layer for a broad share of on-chain economic activity, functioning more like a programmable base layer than plain digital cash.

Since the 2022 Merge, Ethereum uses proof-of-stake: validators lock at least 32 ETH to propose and attest blocks, earning yield and risking slashing for misbehavior. Every transaction pays gas, priced in ETH, for the computation it consumes. Under EIP-1559, a base fee is burned rather than paid to validators, so high demand removes ETH from supply. Rollups batch transactions off-chain and settle proofs to mainnet, scaling throughput while inheriting Ethereum's security.

ETH demand tracks on-chain activity: DeFi usage, stablecoin settlement, NFT and rollup traffic all consume gas and burn base fees. Staking locks up supply and pays a native yield, while the burn can make net issuance negative during busy periods. Catalysts include protocol upgrades that cut fees, growth in layer-2 adoption, and institutional flows via spot ETH products. Competition from rival layer-1s and its own rollups also shapes how much value accrues to mainnet ETH.

Ethereum faces intense competition from faster or cheaper layer-1s and from its own layer-2s, which could dilute fee revenue reaching mainnet. Staking carries slashing and lock-up risk, and smart-contract bugs can drain funds in the applications built on it. Regulatory treatment of staking and tokens remains uncertain. ETH is volatile and trades far below its all-time high, reflecting sharp cyclical drawdowns.