Ethereum (ETH)
Also called: ETH · Ether
Definition
Ethereum is a programmable blockchain that runs smart contracts, and Ether (ETH) is its native coin used to pay gas fees and to stake for network security.
This entry is shown in English.
How Ethereum works
Where Bitcoin focuses on being money, Ethereum is designed as a global computer. Developers deploy smart contracts, programs that run exactly as written, and these power stablecoins, decentralized exchanges, lending markets, NFTs and many of the tokens you see on exchanges.
Every action on Ethereum costs gas, paid in ETH. When the network is busy, gas prices rise, which is why many users move to layer 2 networks such as Arbitrum, Optimism or Base that settle back to Ethereum but charge much lower fees. Since 2021, part of every fee is burned, permanently removing that ETH from supply.
In September 2022 Ethereum moved from proof of work to proof of stake in an upgrade called the Merge. Validators now lock up ETH to propose and confirm blocks and earn rewards for doing so. Many exchanges let you stake ETH through their earn products, while liquid staking protocols give you a token that represents staked ETH. Check the lock-up and withdrawal terms before you stake.
Example
Suppose you want to swap tokens on a decentralized exchange on Ethereum mainnet and the gas cost is 150,000 units at 20 gwei. The fee is 150,000 x 20 = 3,000,000 gwei, or 0.003 ETH. At an ETH price of 3,000 USDT, that is about 9 USDT. The same swap on a layer 2 might cost well under 0.10 USDT, which matters a lot if you are only trading 50 USDT.
Common mistakes
- Withdrawing ETH to a layer 2 or another EVM chain without checking which network the receiving wallet or exchange supports.
- Keeping no ETH in a wallet, then being unable to move ERC20 tokens because there is nothing to pay gas with.
- Assuming staked ETH can always be withdrawn instantly; unstaking can involve a queue or product-specific lock period.
Learn and practise
Try it on an exchange
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Is Ether the same as Ethereum?
Ethereum is the network, and Ether (ETH) is its native coin. In everyday speech many people call the coin Ethereum too.
Does Ethereum have a maximum supply?
No fixed cap exists. New ETH is issued to validators, while part of every transaction fee is burned, so net supply can rise or fall depending on network activity.
What changed with the Merge?
In September 2022 Ethereum switched from proof of work to proof of stake. Mining ended, and validators who stake ETH now secure the network.