Ethereum Ecosystem

What is Ethereum network

Ethereum is an open-source decentralized Proof-of-Stake consensus-based blockchain platform. Initially, Ethereum functioned on the basis of the PoW algorithm.

ETH can also be referred to as a large computer that runs on the blockchain, consisting of many smaller computers inside. These computers, in turn, are networked around the world. However, like any blockchain in its structure.

Ethereum became available to the public in 2013. At that time, a little-known junior crypto-enthusiast Vitalik Buterin published a Whitepaper in which he described the concept of the ETH blockchain for creating DApps with smart contracts. It is noteworthy that in 2011 Buterin co-founded one of the first crypto-media Bitcoin Magazine.

Ethereum was funded through a crowdsale. And in 2015 Buterin was able to raise more 18 million dollars for the development of the Ethereum ecosystem. At that time, it was an absolute record of fundraising. By the way, it can be argued that Ethereum became a driving force in the development of the tokensale culture. However, ICOs soon began to lose popularity due to the activity of fraudsters and were replaced by such trends as IEO and IDO.

Key mechanisms of Ethereum blockchain

Smart-contracts

In fact, ETH is an entire software infrastructure with smart-contracts that exclude the participation of third parties and parties during transactions, deals, and operations in automatic mode, strictly following the rules and conditions of their execution. Note that Smart-contracts can store data information, facts, relationships, balances, and any other information needed for real contracts.

To put it simply, almost any users or developers can run their own program or DApp on ETH using the tools of the Ethereum ecosystem.

Smart-contracts have an unlimited number of applications and scenarios to be executed.

EVM (Ethereum Virtual Machine)

In fact, it is a virtual machine that is responsible for the correct operation of smart-contracts.

While in the Bitcoin network the main function is to conduct transactions between users and their wallets in the distribution registry, the EVM in Ethereum is responsible for performing broader and more complex tasks embedded in smart-contracts.

ERC-20 standard tokens

Ethereum was the first to allow members of the network to issue their own ERC-20 tokens, allowing many blockchain startups to monetize their projects.

ERC-721 tokens

Infamous NFT tokens or non- fungible tokens that contain unique information. It can be information about an image, some file, document and more. NFT is a unique digital asset in a singular number that cannot be replaced or repeated.

Key features of ETH

• Decentralized environment for DApps developers
• Ability to create self-executing smart contracts
• Scalability
• Ability to create custom tokens and cryptocurrencies
• High throughput

L2 solutions

It is also noteworthy that Ethereum has brought a technology such as layer 2 solutions to the blockchain space. These solutions are developed on the main network and are designed to increase the throughput of L1 blockchains.

In turn, L2 solutions are implemented using Rollups technology, which allows hundreds of other transactions from L2 blockchains to be included in a single L1 transaction. Example of L2 solutions: Arbitrum, Optimism, Starknet.

Investors & partners

Key investors of Ethereum ecosystem are major venture capital funds, including:

• a16z (Andreessen Horowitz)
• Pantera Capital
• Galaxy
• Paradigm
• Delphi Ventures
• MulticoinCapital
• CMT Digital
• Electric Capital
• Kenetic Capital and many others.

It is now obvious that not only small startups or ordinary developers are interested in Ethereum. Such giants as:

• Amazon
• Microsoft
• Intel
• IBM
• JPMorgan
• Citigroup
• Goldman Sachs
• VisaMasterCard
• Paypal and many others…

A lot of projects, products, services, cryptocurrencies that exist today in the blockchain technology segment, which you can see and most likely use, most of them are based on the Ethereum blockchain.

Token ETH

ETH cryptocurrency is a proprietary service token of the Ethereum ecosystem, which acts not only as the main unit of account, but also gives access to all services and services offered by the project. In particular, token holders get access to decentralized applications built on Ethereum, pay commissions and use in staking, receiving rewards.

It is an important fact that ETH is widely used as collateral, currency and unit of account in various DeFi economic protocols.

It is worth noting that Ethereum experienced one of the biggest crises in the summer of 2016. Then hackers, having broken the smart-contract The DAO, stole the company tokens to the amount of 50 million dollars. After that, the Ethereum team had to conduct a Hard Fork of the main ETH network to return the funds to the victims. However, some users did not agree with this decision and created their own token Ethereum Classic (ETC).

Conclusion

Thanks in large part to a solution like Ethereum and its very voluminous contribution to development, the blockchain industry has gained the lion’s share of popularity around the world. The innovative technology has received massive acceptance from ordinary users, developers and investors.