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Project Overview
Ethereum introduced the concept of programmable money. Instead of only sending and receiving value, users can interact with smart contracts that run automatically once the conditions are met. This is what enabled DeFi, lending, DEXs and NFT marketplaces.
The move to Proof of Stake reduced the energy consumption of the network and created the base for future scaling solutions like rollups and sharding. ETH is used to pay transaction fees, secure the network through staking and access on-chain services.
Key Insights
Ethereum is still the main infrastructure for on-chain activity. Most large protocols launch on Ethereum first because of its security, developer tools and existing liquidity. It is the standard that many layer 2 networks are built on.
Activity on Ethereum can be cyclical. When DeFi or NFTs are growing, gas fees increase and ETH demand follows. This is why Ethereum is often seen as an index of blockchain usage. As more users move on-chain, ETH becomes more valuable.
Staking allows ETH holders to earn yield while helping to secure the network. This has turned ETH into a productive asset. For some investors, this makes Ethereum different from Bitcoin, since ETH is both a utility token and a network asset.
Common Questions About Ethereum
1. What is Ethereum mainly used for?
It is used to run smart contracts and decentralized apps like DeFi platforms or NFT marketplaces.
2. Is Ethereum still relevant with so many new chains?
Yes. Many new chains are compatible with Ethereum and still rely on its ecosystem and liquidity.
3. Why are Ethereum fees sometimes high?
When the network is busy, users compete to include their transactions first, so fees go up.
4. What changed with Proof of Stake?
The network now uses validators instead of miners, which reduced energy usage and prepared scaling.
5. Is ETH only for paying gas?
No. ETH is also staked, used as collateral in DeFi and sometimes treated as a long term investment.
Market Context
Ethereum often moves together with Bitcoin but it also reacts to on-chain activity. When new sectors appear on Ethereum, such as NFTs in the past or liquid staking, ETH demand can rise faster than the broader market.
Because so many projects depend on Ethereum, its health is a good indicator of the state of the crypto industry. If Ethereum fees and DeFi volumes rise, it usually means users and capital are coming back on-chain.