In one sentence
Bitcoin proved you can keep a ledger without a bank. Ethereum went one step further: the ledger can record not only who owns what, but also run programs. These programs are called smart contracts; once deployed, nobody can change them or switch them off. Almost all of today’s DeFi, stablecoins and NFTs first grew up on Ethereum.
BNB Chain in the previous guide, and most Layer 2s, use Ethereum’s virtual machine (the EVM). Understand Ethereum and you understand half of the chains out there.
Where it came from
At the end of 2013 a 19-year-old Vitalik Buterin wrote the Ethereum white paper. Mainnet went live on 30 July 2015.
Milestones you cannot skip:
- The DAO, 2016: a crowdfunding contract was drained of a large amount of ETH by an attacker, and the community voted for a hard fork to recover the funds. Those who disagreed stayed on the original chain, which is today’s Ethereum Classic (ETC).
- London upgrade, August 2021: introduced EIP-1559, under which each transaction’s “base fee” is burned. From then on, the busier the chain, the more ETH is destroyed.
- The Merge, 15 September 2022: Ethereum switched from mining (PoW) to staking (PoS), cutting energy use by more than 99%.
- Dencun upgrade, March 2024: opened a cheap data lane for Layer 2s (blobs), and Layer 2 fees dropped sharply. The 2025 Pectra upgrade then raised the maximum a single validator can stake from 32 ETH to 2,048 ETH.
Who produces blocks: PoS
To take part in keeping the ledger, you stake 32 ETH and run a validator.
- Time is cut into 12-second slots. In each slot one validator is chosen at random to propose a block, and a batch of validators is chosen as a committee to vote on it.
- 32 slots make an epoch (about 6.4 minutes). Once a block has been confirmed by votes in two consecutive epochs it is “finalised”; reversing it would require an attacker to put up a third of all staked ETH for slashing.
- Misbehaviour (such as signing two different blocks in the same slot) is punished by slashing the staked ETH.
There are currently 834.9K active validators in an epoch. A “validator” here is a unit of stake, not a person or institution: one large operator may run thousands of them. Measured block time is 12.0 s, close to the designed 12 seconds.
- 01Signed and sent
The wallet signs, sets the maximum gas and tip it is willing to pay, and sends it to a node.
Instant - 02Into the mempool
The transaction spreads between nodes. Specialised "builders" pick the most profitable bundle of transactions.
- 03Proposer proposes
The validator chosen for this slot proposes a set of transactions as a new block.
About one block every 12.0 s - 04Committee votes
The committee for the same slot checks the block and votes on it.
- 05Finalised
After two epochs of votes the block is finalised and practically cannot be rolled back.
About 12.8 minutes
Most apps treat a transaction as done a few seconds after inclusion; exchanges and other large-value cases wait for finality.
Gas and ETH
Everything you do on Ethereum costs gas. A transaction’s fee = gas used × price per unit, and the price has two parts:
- Base fee: set automatically by the network according to congestion and burned outright; nobody receives it.
- Tip: goes to the validator producing the block; pay more to jump the queue.
So ETH has no fixed supply cap: staking rewards are issued to validators on one side, and ETH is burned according to on-chain activity on the other. When the chain is very busy, burning can exceed issuance and total supply shrinks. About 122.14M ETH are in circulation, a market cap of $298B.
What is on-chain today
- USDT 51% $73.06B
- USDC 31% $44.66B
- Other 18% $26.06B
Sources: CoinGecko (market cap, supply), DefiLlama (TVL, stablecoins, DEX volume, fees, protocols), measurements from public nodes (block time, validators).
Things worth noticing:
- Ethereum is still the chain with the most money: $50.3B locked and $144B in stablecoins, both the highest of the chains covered on this site.
- Most of the locked value is staking: liquid staking protocols such as Lido pool users’ ETH to run validators and issue a tradable “staking receipt” token in return.
- Most everyday transactions have moved to Layer 2s: mainnet looks more and more like a “settlement layer”, with Layer 2s such as Base and Arbitrum batching transactions and settling them back on mainnet. Layer 2s have their own Layer 2 section.
Strengths and trade-offs
- Highly decentralised: hundreds of thousands of validators and clients maintained by several independent teams; no single party can easily control or shut it down.
- The longest security record: mainnet has run for more than ten years and the chain itself has never been compromised.
- The most money and developers: leading stablecoin, lending and exchange protocols are almost all here, with the deepest liquidity.
- Mainnet is expensive and slow: a transaction costs a few dollars to tens of dollars when congested, and finality takes over ten minutes.
- The experience is fragmented: assets are spread across mainnet and many Layer 2s, moving between them requires bridges, and bridges are a risk in their own right.
- Staking is increasingly concentrated in a few large staking services and exchanges.
- 01
Is the contract a proxy (upgradeable)? Upgradeable means the logic can be swapped at any time, so check who holds the upgrade key: a single wallet, a multisig, or a governance contract with a timelock.
- 02
Does the token have privileged functions such as minting, blacklisting or pausing, and have those permissions been renounced?
- 03
Among the top ten holders, which are exchanges, bridges or staking contracts (normal), and which are the team or wallets funded from the same source (a warning sign)?
- 04
Who have you granted approvals to? An "unlimited approval" to an unknown contract lets it move your tokens at any time.
- 05
If the project mainly runs on a Layer 2, also check the bridge it uses and that Layer 2's withdrawal mechanism.
Data and sources
- Live figures: CoinGecko, DefiLlama, a public Ethereum execution node (block time) and a beacon chain node (committee membership in the current epoch).
- Mechanisms are based on ethereum.org documentation and EIPs (EIP-1559, EIP-4844, EIP-7251 and others).
- This guide is educational and is not investment advice.
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