Ethereum, the decentralized world computer
Ethereum launched in July 2015 by Vitalik Buterin, then 21 years old, with a different ambition from Bitcoin. Where BTC aims for an alternative currency, ETH aims for a programmable world computer: infrastructure where anyone can deploy self-executing contracts (smart contracts) accessible to all humanity 24/7, without intermediary or permission.
This idea founded the entire DeFi ecosystem (decentralized finance), NFTs, DAOs (autonomous organizations), and all Layer 2 blockchains that lean on Ethereum as a security layer.
The Merge: transition to Proof-of-Stake
On September 15, 2022, Ethereum achieved what many deemed impossible: switching from Proof-of-Work to Proof-of-Stake without service interruption. This upgrade, dubbed The Merge, reduced the network's energy consumption by over 99.95 %. Now validators secure the network by staking 32 ETH each (~$80,000 at current price) and earn ~3-4 % APY in rewards.
Major consequence: ETH became a deflationary asset under certain conditions. Part of the gas fees is burned (EIP-1559 mechanism), and when network activity exceeds issuance from staking, total ETH supply decreases.
The Layer 2 ecosystem: the "rollup-centric" roadmap
Ethereum L1 processes ~15-30 transactions per second, insufficient for mass adoption. The official solution is the Layer 2 roadmap: secondary blockchains (Arbitrum, Base, Optimism, zkSync) that inherit Ethereum's security but process transactions at scale. With the Dencun upgrade in March 2024, L2 costs dropped to $0.01-0.05 per swap (vs $5-50 on L1).
Today, over 80 % of Ethereum user activity happens on Layer 2. L1 becomes a final settlement layer, like Fed Wire between banks.
Iconic use cases
- DeFi: Aave, Uniswap, Lido, MakerDAO — totaling ~$80 billion TVL in 2026
- Stablecoins: USDC, USDT, DAI predominantly issued on Ethereum (and Layer 2s)
- NFTs: OpenSea, Blur — Ethereum remains the reference blockchain for digital art and collectibles
- Real-world asset tokenization: BlackRock launched its BUIDL tokenized fund on Ethereum in 2024 (>$1 billion AUM)
Risks and criticisms
Ethereum remains complex for end users: managing a wallet, paying gas, navigating between L1 and L2. Competition is also fierce — Solana claims better performance for many use cases, and each new blockchain (Sui, Aptos) claims to do better. Finally, staking centralization risk is monitored: Lido alone holds ~30 % of staked ETH, raising questions about consensus decentralization.