Introduction: Definition and Historical Positioning of Ethereum (ETH)
Ethereum (ETH) is the most influential blockchain platform after Bitcoin. Its core innovation is the introduction of smart contract functions, which expands blockchain technology from simple currency transactions to a global computing platform that supports decentralized applications (DApp). Ethereum (ETH) was officially launched by Vitalik Buterin and others in 2015. Its goal is to build a “trustless trust machine” through programmable blockchain technology to provide decentralized solutions for finance, supply chain, Internet of Things and other fields.
Unlike Bitcoin, which focuses on peer-to-peer payments, the underlying design of Ethereum (ETH) focuses more on flexibility and scalability. Its native token ETH is not only a medium of transaction, but also a “fuel” (Gas) that supports the operation of smart contracts and network security. As of 2025, Ethereum (ETH) has become the core infrastructure of DeFi (decentralized finance), NFT (non-fungible tokens) and Web3 ecology, and the total locked value (TVL) has long been ranked first in the industry.
Technical architecture: the core innovation of Ethereum (ETH)
The technical architecture of Ethereum (ETH) includes several key modules, and its design goal is to strike a balance between decentralization, security and scalability. According to source code analysis, the node service of Ethereum (ETH) is implemented through the `Ethereum` structure, integrating components such as blockchain database, transaction pool, consensus engine (such as proof of work PoW or proof of stake PoS) and protocol manager (ProtocolManager).
1. Smart contracts and virtual machines
The smart contracts of Ethereum (ETH) are executed through the Ethereum virtual machine (EVM), and developers can use programming languages such as Solidity to write contract logic. Once the contract is deployed, its code cannot be tampered with and the preset rules are automatically executed. For example, the DeFi protocol Uniswap implements the automatic market maker (AMM) function through smart contracts without relying on centralized exchanges.
2. The evolution of the consensus mechanism
Ethereum (ETH) adopted the PoW consensus in the early days, but its high energy consumption problem caused controversy. After the “Merge” in 2022, Ethereum (ETH) fully switched to the PoS mechanism. Validators participated in block generation by staking ETH, reducing energy consumption by more than 99%. This shift not only improved network efficiency, but also laid the foundation for subsequent sharding upgrades.
3. Expansion Technology
Faced with transaction congestion and high gas fees, Ethereum (ETH) proposed a layered expansion solution. The Layer1 mainnet uses sharding technology to increase throughput, while Layer2 (such as OptimisticRollup and ZK-Rollup) batches transactions and compresses them before submitting them to the mainnet, significantly reducing costs. For example, Layer2 projects such as Arbitrum and zkSync have achieved processing capabilities of thousands of transactions per second.
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Ecosystem: Application scenarios and ecological construction of Ethereum (ETH)
The Ethereum (ETH) ecosystem covers multiple fields such as finance, art, and games. Its openness and composability have spawned a large number of innovative applications.
1. Decentralized Finance (DeFi)
Ethereum (ETH) is the birthplace of DeFi, supporting financial services such as lending, trading, and derivatives. As of 2025, the assets managed by protocols such as MakerDAO and Aave will exceed $100 billion, and users can directly participate through smart contracts without the need for traditional financial institutions.
2. NFT and digital ownership
The ERC-721 standard of Ethereum (ETH) defines the issuance and circulation rules of NFT, promoting the prosperity of digital art, virtual real estate and other fields. For example, NFT projects such as CryptoPunks and BoredApeYachtClub have achieved hundreds of millions of dollars in transaction volume through Ethereum (ETH).
3. Layer2 and cross-chain interoperability
In order to alleviate the pressure on the main network, Ethereum (ETH) actively promotes the development of the Layer2 ecosystem. At the same time, cross-chain bridges (such as Polygon and Chainlink) have achieved asset interoperability with other blockchains (such as Solana and Bitcoin L2), further expanding the application scenarios.
4. Developer community and foundation support
The Ethereum Foundation promotes ecological innovation through funding and technology incubation. In the third quarter of 2024, the foundation allocated $12.84 million to support zero-knowledge proofs, consensus layer optimization, and educational projects, such as Lighthouse performance optimization research and developer training in Southeast Asia.
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Challenges and responses: Ethereum (ETH) competition and improvement direction
Despite its market dominance, Ethereum (ETH) still faces multiple challenges.
1. Scalability trilemma
Ethereum (ETH) needs to balance decentralization, security, and performance. Competitor Solana attracts users through high throughput, but its centralized design sacrifices censorship resistance. Ethereum (ETH) insists on “modular expansion” through Rollup and sharding to ensure the underlying decentralized characteristics.
2. User experience and rebranding
Ethereum (ETH) has been criticized for complex L2 interactions and high learning costs. The community is simplifying wallet operations through account abstraction (AA) and promoting the “Ethereum Brand Hackathon” event to reshape its cultural image. For example, the ETHDenver conference encourages developers to combine the spirit of cypherpunks to create more attractive DApps.
3. Regulatory and compliance risks
As global regulators intensify their scrutiny of DeFi and stablecoins, Ethereum (ETH) needs to find a balance between compliance and decentralization. The Foundation recently clarified rumors that were not related to MakerDAO’s staking transactions, highlighting its emphasis on transparency.
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Market performance and future prospects
As of March 2025, the price of Ethereum (ETH) has experienced fluctuations, with the latest quotation being $2,000.52, a decline from its historical high. Market analysis shows that the ETH/BTC exchange rate is at its lowest level since 2018, reflecting that investors prefer Bitcoin’s safe-haven properties in the short term. However, the long-term value of Ethereum (ETH) is still optimistic:
-Technology upgrade: Dencun upgrade further reduces Layer2 costs, and sharding technology is expected to be fully implemented in 2026.
-Cultural penetration: The community plans to learn from the “IntelInside” model and require DApp to be labeled “BuiltonEthereum” to strengthen brand awareness.
-Cross-chain integration: Link with the Bitcoin ecosystem through solutions such as BitVM to consolidate its position as a “global settlement layer”.
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Conclusion
Ethereum (ETH) is not only a milestone in blockchain technology, but also the infrastructure of the digital economy. It has built an open and transparent global collaborative network through smart contracts, decentralized governance and continuous technological iteration. Despite facing competition and challenges, Ethereum (ETH) still has the vision of “the Internet you can own” and is committed to allowing users to truly control digital assets and identities. In the future, with technological breakthroughs and ecological expansion, Ethereum (ETH) may become the core engine of the Web3 era.
