What is Ethereum (ETH)?
Ethereum is a blockchain platform for decentralized applications, and the second in capitalization of cryptocurrency (ETH). Most of the popular projects in the field of Defi and NFT work on Ethereum.
Who and when created Ethereum?
Ethereum is considered the main creator and “face” Vitalik Buterina. He was born in 1994 in the city of Kolomna near Moscow. At the age of six, he moved with his parents to Canada, where he lives to this day. From childhood he was fond of programming and informatics, studied cryptography at the university.
Ether (ETH) – colloquial name for eThereum native cryptocurrency. It is necessary for the work of decentralized applications and paying commissions for transactions in this network.
After activating the update of The Merge in September 2022, Ethereum began to work on the Ethereum network: ETH holders can block coins and receive income from them. However, it will be possible to remove cryptocurrency from stakeing only after the introduction of a cartoon in Ethereum – this should happen within 2023. To participate in the air steaking, you need to start your node (this will need equipment and 32 ETH) or use a centralized service, such as Everstake, Lido or Binance.
ETH is the second digital asset in the cryptocurrency market. As of the end of October 2022, the total cost of all air coins exceeds $ 192 billion. The Ethereum course increased 10 times less than two years: back in July 2020, one coin cost $ 300, but by the end of 2021 its price was fixed at a level above $ 3000. You can buy Ethereum on almost any cryptocurrency exchange.
How hack The Dao influenced the development of Ethereum?
The first major crisis for Ethereum was the hack The Dao. This is a decentralized autonomous organization (Tao), which intended to manage the investment fund using the votes of members of parties. The work of The DAO was planned to be built on smart contracts Ethereum. Following the results of the ICO, its founders attracted funds of $ 150 million.
In June 2016, the project’s smart contract, using the exploit, hacked the hacker and brought the The DAO tokens in the amount of $ 50 million from it. After that, the Ethereum team held a network hard for to return the stolen funds to the victims. Part of the community, disagreeing with this decision, continued the former branch, calling her Ethereum Classic project.
Tokenses appeared thanks to Ethereum?
In 2017, the cryptocurrency market began to grow sharply, they started talking about it at the global level. They began to actively invest in digital assets, including retail investors. Against this background, hundreds of projects appeared that tried to repeat Ethereum’s success: published Whitepaper and conducted ICO. Due to the availability of ERC-20, anyone could release its token.
The peak of the activity of tokensils came on the 1st quarter of 2018-the total amount of fees for them amounted to about $ 7 billion. But then public tokens have practically stopped: cryptocurrency prices began to fall, in addition, tokenses criticized the authorities of various countries.
Investors fell confidence in ICO, as they became a popular tool of scammers.
New formats of tokensils gradually appeared: IEO (Initial Exchange Offering) – the sale of project tokens through a special service on the exchange, as well as IDO (Initial Decentralized Offering) – attracting investments through the pharmacist of the asset.
How Ethereum led to the creation of Defi?
The emergence of the sphere of decentralized finance (Defi) is to a large extent the merit of Ethereum. In 2017-2018, several iconic projects began to work on the basis of this blockchain, the popularity of which led to the heyday of Defi:
. The first popular protocol that allows any user to release Steabelcoin DAI on the security of various crypto assets. The protocol controls through Tao, in the votes of which the holders of the Maker token (MKR) can participate. . For the first time, liquidity pools for various crypto acts were used in this project. In addition, Compound held for its users the first in the history of IDO, distributing the COMP control token through pharmacing. – decentralized exchange for the sale of cryptocurrencies, in which the mechanism of automatic market maker was first used for the first time. It forms a semblance of an exchange glass and produces Matching applications without a book of orders. Uniswap was the first protocol with relatively quick trading transactions in the blockchain.
Today, Defi operates hundreds of projects with various functions, such as AAVE, Curve Finance, 1inch, Balancer, Dydx, Notial and others. They use different technologies and blockchains, but the first was Ethereum.
Do Ethereum competitors?
The blockchain platform model justified itself and Ethereum has become the main crypto project along with bitcoin. But the main components of Ethereum have not changed for several years, and during this time the crypto industry has come a long way. The performance for which the main blockchain platform is designed is no longer enough.
Now Ethereum can process no more than 13-15 transactions per second (TPS), its network has repeatedly worked with failures and delays due to overload, and the commission for transfers is stably high.
At the same time, its modern “killers” have a performance tens and hundreds of times higher. TEZOS blockchain speed exceeds 1000 TPS, Polkadot – up to 3000 TPS, Solana – up to 50,000 TPS.
Each of the blockchain platforms offers its own scaling solution, that is, the ability https://gagarin.news/ to increase its throughput with an increase in the load. For example, SOLANA uses the implementation of the consensus algorithm Practical Byzantine Fault Tolerance, and Polkadot consists of several interconnected blockchains.
However, the growth of scalability has the shortcomings described in the trilight of the blockchain. It says that of three key properties – performance, safety and decentralization – a decentralized network can simultaneously provide only two. Like Ethereum, and its competitors seek to get around this theorem, but there is no universally recognized solution.
How Ethereum is developed?
The developers have come up with several ways to increase Ethereum throughput and at the same time reduce the size of the commissions. One of these areas is the solutions of the second level (Layer 2).
These are applications and frameworks that unfold on top of the main blockchain “first level” (Layer 1). An additional “layer” allows you to reduce the commission for transfers and increase the speed of transactions.
L2-solutions on the Ethereum blockchain are implemented using Rollups technology, which allows you to include hundreds of transactions passing through the second level in one transaction of the first level. Examples of such applications are Arbitrum, Optim, Dydx, Starknet.
Another direction – sides. These are “parallel” networks that are associated with the main blockchain and between which transactions can be carried out. An example of Sidereum compatible with Ethereum – Polygon POS (one of the elements of the Polygon network).
What is Ethereum 2.0 (ETH2)?
Ethereum 2.0 (ETH2)-a large update announced back in 2017 and designed to increase the scalability of this blockchain platform using global changes in its architecture. At the beginning of 2022, Ethereum developers abandoned this term.
Ethereum upgrade is divided into several large updates:
- The transition to the consensus algorithm Proof-OF-Stake (successfully took place on September 15, 2022);
- Introduction of cartriding technology: separation of blockchain into controlled segments (hearts) and parallel execution of operations in each of them;
- The new Ewasm virtual machine, which will support smart contracts developed in popular programming languages.
The update is introduced in several stages, the exact terms for the execution of all its points are unknown. According to approximate estimates, work will be completed in 2023-2024.