Complete guide on Ethereum (ETH) Token - What is it, price and yields

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What is Ethereum (ETH)?

Ethereum is a decentralized open source blockchain system that has its own cryptocurrency, Ether. ETH works as a platform for many other cryptocurrencies, as well as for the execution of decentralized smart contracts.

Ethereum was first described in a 2013 white paper by Vitalik Buterin. Buterin, along with other co-founders, secured funding for the project in an online public sale in the summer of 2014. The project team managed to raise $18.3 million worth of Bitcoin and the price of Ethereum in the initial coin offering ( ICO). was $0.311, with over 60 million Ether sold. Taking the price of Ethereum now, this puts the return on investment (ROI) at an annualized rate of over 270%, essentially nearly quadrupling your investment every year since the summer of 2014.

The Ethereum Foundation officially launched the blockchain on July 30, 2015, codenamed the prototype "Frontier." Since then, there have been several network updates: "Constantinople" on February 28, 2019, "Istanbul" on December 8, 2019, "Muir Glacier" on January 2, 2020, "Berlin" on April 14, 2020. 2021 and most recently on August 5, 2021, the "London" hard fork.

The purported goal of Ethereum is to become a global platform for decentralized applications, allowing users around the world to write and run software that is resistant to censorship, downtime, and fraud.

Who are the founders of Ethereum?

Ethereum has a total of eight co-founders, an unusually high number for a crypto project. They met for the first time on June 7, 2014 in Zug, Switzerland.

  • Russian-Canadian Vitalik Buterin is perhaps the best known of the bunch. He wrote the original white paper that first outlined Ethereum in 2013 and is still working on improving the platform. Prior to ETH, Buterin co-founded and wrote for the Bitcoin Magazine news website.
  • British programmer Gavin Wood is arguably the second most important co-founder of ETH, having coded the first technical implementation of Ethereum in the C++ programming language, proposing the native Ethereum Solidity programming language, and serving as Ethereum's first CTO. the Ethereum Foundation. Before Ethereum, Wood was a researcher at Microsoft. Later, he went on to found the Web3 Foundation.

Among the other co-founders of Ethereum are: - Anthony Di Iorio, who signed the project during its first phase of development. - Charles Hoskinson, who played the leading role in the creation of the Swiss-based Ethereum Foundation and its legal framework. - Mihai Alisie, who helped establish the Ethereum Foundation. - Joseph Lubin, a Canadian entrepreneur who, like Di Iorio, helped fund Ethereum in its early days and later founded an ETH-based startup incubator called ConsenSys. - Amir Chetrit, who helped found Ethereum but walked away from it early in development.

What makes Ethereum unique?

Ethereum pioneered the concept of a blockchain smart contract platform. Smart contracts are computer programs that automatically perform the actions necessary to fulfill an agreement between multiple parties on the Internet. They have been designed to reduce the need for trusted intermediaries between contractors, thus reducing transaction costs and increasing the reliability of transactions.

Ethereum's main innovation was the design of a platform that would allow smart contracts to be executed using blockchain, further reinforcing the already existing benefits of smart contract technology. The Ethereum blockchain was designed, according to co-founder Gavin Wood, as a kind of "one computer for the entire planet," theoretically capable of making any program more robust, resistant to censorship, and less prone to fraud when running it. Worldwide. distributed network of public nodes.

In addition to smart contracts, the Ethereum blockchain is capable of hosting other cryptocurrencies, called "tokens," by using its ERC-20 compatibility standard. In fact, this has been the most common use of the ETH platform so far: over 280,000 ERC-20 compliant tokens have been launched to date. More than 40 of these are the top 100 cryptocurrencies by market capitalization, for example USDT, LINK and BNB. Since the rise of Play2Earn games, there has been a substantial increase in interest in ETH to PHP prices.

Ethereum London Hard Fork

The Ethereum network has been plagued by high transaction fees, which often creep up in times of high demand. In May 2021, the average network transaction fee peaked at $71.72.

In addition to the high transaction cost, the leading altcoin also suffers from scalability issues.

As already mentioned, it is planned to move to a proof-of-stake algorithm to increase the scalability of the platform and add a number of new features. The development team has already started the process of transitioning to ETH 2.0, rolling out a few updates along the way, including the London hard fork.

The London Update went live in August 2021. It included five Ethereum Improvement Proposals (EIPs), namely EIP-3529, EIP-3198, EIP-3541, and notably EIP-1559 and EIP-3554.

EIP-1559 is probably the most popular update of all the EIPs.

What is EIP-1559?

The EIP-1559 update introduces a mechanism that changes the way gas fees are estimated on the Ethereum blockchain. Before the update, users had to participate in an open auction for a miner to collect their transactions. This process is known as a "first price auction" and, unsurprisingly, the highest bidder wins.

With the EIP-1559, this process is handled by an automated bidding system and there is a "base fee" for transactions to be included in the next block. This fee varies depending on network congestion. Also, users who want to speed up their transactions can pay a "priority fee" to a miner for faster inclusion.

EIP-1559 also introduces a loading mechanism. A portion of each transaction fee (the base fee) is burned and removed from circulation. This is intended to reduce the circulating supply of Ether and potentially increase the value of the token over time.

Interestingly, less than two months after the London upgrade was implemented, the network had burned over $1 billion worth of Ether.

ethereal 2.0

In 2022, Ethereum plans to move to proof of stake with its Ethereum 2.0 upgrade. This step has been on the Ethereum roadmap since the network's inception and would see a new consensus mechanism, as well as introduce sharding as a scaling solution. The current Ethereum chain will become the Beacon chain and will serve as the settlement layer for smart contract interactions on other chains.

At the end of 2021, Ethereum's Arrow Glacier update has been postponed until June 2022. Until then, Vitalik Buterin predicts that the path to the end of the network will be determined by optimistic summaries and Zk summaries.

How many Ethereum (ETH) coins are there in circulation?

As of September 2021, there were approximately 117.5 million ETH coins in circulation, 72 million of which were issued on the genesis block, the first block on the Ethereum blockchain. Of these 72 million, 60 million were awarded to the initial contributors of the 2014 collective sale that financed the project and 12 million to the development fund.

The remaining amount was issued in the form of bulk rewards for miners on the Ethereum network. The original reward in 2015 was 5 ETH per block, which was later reduced to 3 ETH in late 2017 and then 2 ETH in early 2019. The average time it takes to mine an Ethereum block is around 13 to 15 seconds.

In the August 2021 Ethereum network update, the London hard fork contained the Ethereum Enhancement Protocol, EIP-1559. Instead of the first price auction mechanism where the highest bidder wins, EIP-1559 introduces a "base fee" for transactions to be included in the next block. Users who want to prioritize their transactions can pay a "tip" or "priority fee" to the miners. As the base fee dynamically adjusts to transaction activity, this reduces the volatility of Ethereum gas fees, although it does not reduce the price, which is notoriously high during spikes in network congestion.

One of the main differences between the economy of Bitcoin and that of Ethereum is that the latter is not deflationary, that is, its total supply is not limited. The developers of Ethereum justify this by not wanting to have a "fixed security budget" for the network. Being able to regulate the emission rate of ETH by consent allows the network to maintain the minimum emission necessary for adequate security.

However, with the introduction of EIP-1559, the basic fees used in transactions are burned, removing ETH from circulation. This means that more network activity would lead to more ETH burned and the decrease in supply should lead to Ethereum price appreciation, all other things being equal. This has the potential to make Ethereum deflationary, something that ETH holders are excited about: a potential Ethereum price appreciation today.

How is the Ethereum network protected?

As of August 2020, Ethereum is protected by the Ethash proof-of-work algorithm, which belongs to the Keccak family of hash functions.

However, there are plans to move the network to a proof-of-stake algorithm tied to the major Ethereum 2.0 update, released in late 2020.

After the Ethereum 2.0 beacon chain (Phase 0) went live in early December 2020, it became possible to start participating in the Ethereum 2.0 network. An Ethereum stake is when you deposit ETH (32 ETH required to activate validation software) into Ethereum 2.0 by submitting it to a deposit contract, which helps protect the network by storing data, processing transactions, and adding of new blocks to the blockchain. . As of this writing in mid-September 2021, the Ethereum price now for 32 Ether is around $116,029. The amount of money Ethereum validators are making right now is a 6% return in April, which works out to around 1.91952 ETH, or $6960 at Ethereum's current price. This number will change as the network develops and the number of participants (validators) will increase.

Ethereum staking rewards are determined by a distribution curve (average staking and percentage of participants): some rewards for participating in ETH 2.0 were 20% for initial participants, but will drop to end up between 7-4% .5% per year.

The minimum requirements for a stake in Ethereum is 32 ETH. If you decide to opt out of Ethereum 2.0, it means that your Ethereum stake will be locked to the network for months, if not years, in the future until the Ethereum 2.0 upgrade is complete.

Where can you buy Ethereum (ETH)?

As Ethereum is the second largest cryptocurrency after Bitcoin, it is possible to buy Ethereum or use ETH trading pairs on almost any major cryptocurrency exchange. Some of the largest markets include:

  • Binance
  • CoinbasePro
  • Accept ex.
  • kraken
  • world huobi

Popular Ethereum price pairs include: ETH/USD, ETH/GBP, ETH/AUD, and ETH/JPY.