Ethereum

Ethereum is a decentralized blockchain platform that enables developers to build and run smart contracts and decentralized applications (dApps) without intermediaries.

How It Works

Ethereum operates on a peer‑to‑peer network of nodes that maintain a shared ledger. The platform’s native cryptocurrency, Ether (ETH), pays for computational work.

• Smart contracts: Self‑executing code stored on the blockchain that runs when predefined conditions are met.
• Ethereum Virtual Machine (EVM): A runtime environment that executes smart contract code identically on every node.
• Consensus mechanism: After the Merge, Ethereum uses Proof‑of‑Stake, where validators stake ETH to propose and attest to blocks, securing the network with lower energy use.
• Gas fees: Users pay a small amount of ETH (gas) to compensate validators for processing transactions and contract execution.
• Decentralized applications (dApps): Front‑end interfaces interact with smart contracts via wallets, enabling services ranging from finance to gaming.

Why It Matters

Ethereum’s programmability unlocked a new wave of financial innovation. By removing intermediaries, it allows anyone with an internet connection to access lending, borrowing, trading, and asset creation services.

For example, the lending protocol Aave lets users deposit cryptocurrency into a smart contract pool and earn interest automatically, while borrowers can take out over‑collateralized loans without a credit check. This composability—where dApps can call each other’s contracts—has fueled the rapid growth of decentralized finance (DeFi), non‑fungible tokens (NFTs), and tokenized real‑world assets, making Ethereum a foundational layer for the emerging digital economy.