Ethereum ETH

Ethereum is a blockchain that runs programs called smart contractsSmart contract A program stored on a blockchain that runs automatically when its conditions are met.. Those programs power much of the crypto economy: tokens, stablecoinsStablecoin A token designed to hold a steady value, usually one US dollar., decentralized exchanges, lending markets, NFTs and more. Ether (ETH) is the network’s native currency and is used to pay gas feesGas fee The fee you pay to have a transaction processed on Ethereum and similar networks..

Ethereum launched in 2015. In September 2022 it moved from proof of workProof of work A consensus method where miners spend computing power to earn the right to add the next block. to proof of stakeProof of stake A consensus method where validators lock up coins as collateral for the right to add blocks. in an upgrade known as “the Merge.” Instead of miners, validatorsValidator A participant in a proof-of-stake network who stakes coins and helps propose and confirm blocks. now secure the network by locking up (“staking”) ETH, earning rewards for honest participation and risking penalties for misbehaviour.

Much of Ethereum’s transaction activity has moved to layer 2Layer 2 A network built on top of a blockchain that processes transactions more cheaply and settles back to it. networks, which bundle many transactions together and post the results back to Ethereum. This keeps fees lower for users while relying on Ethereum for security.

Unlike bitcoin, ETH has no fixed maximum supply. New ETH is issued to validators, while part of every transaction fee is permanently destroyed (“burned”), so the total supply can rise or fall over time.