Ethereum

What is Ethereum

Ethereum is a Proof-of-Stake blockchain that powers decentralized applications (dApps) through smart contracts, without being controlled by a centralized entity. As the first blockchain to feature smart contracts, it has the largest ecosystem of decentralized applications, ranging from decentralized exchanges to crypto lending and borrowing platforms and more.

Ethereum is also home to numerous Layer 2 solutions that offer users a cheaper and faster way to process transactions on the blockchain. Some of these solutions include Arbitrum, which rolls up multiple transactions into a single transaction on Ethereum, and Polygon’s Proof-of-Stake chain, which is a sidechain that runs parallel to the Ethereum blockchain.

What Makes Ethereum Unique?

Ethereum allows for the creation of ERC-20 tokens, which can be used as native tokens for the applications that live on the Ethereum blockchain. These tokens can be used for governance on their respective applications, for utility purposes such as paying trading fees, or as stores of value, as in the case of stablecoins like USDT and USDC. However, gas fees for transactions are still paid in ETH, as transactions are still recorded on the Ethereum blockchain.

What’s Next for Ethereum

Now that the Merge is over, the final stage of Ethereum 2.0 is sharding, where the database on the Ethereum blockchain is split into 64 shard chains. With sharding, each validator only needs to verify the respective shards they’re responsible for, instead of verifying the entire network. This will also lower the barrier to entry for anyone who wishes to run a node. Besides encouraging further decentralization, this will improve scalability and ideally reduce the gas fees on the Ethereum network.