If Bitcoin is the ancestor of blockchain, then Ethereum can be said to be the beginning of blockchain 2.0. The emergence of Bitcoin allowed people to know for the first time how value is transmitted through the network, and the creation of Ethereum smart contracts opened the door to the development of blockchain.

Introduction

Introduction

Ethereum, a decentralized blockchain platform with smart contract functions. It is currently the second largest blockchain platform by market capitalization, second only to Bitcoin.

Unlike Bitcoin, Bitcoin can be considered as a decentralized currency, which only has the function of value exchange and has no other applications or functions. The latest news is that the Bitcoin development team is considering adding smart contract functions to Bitcoin. How long or whether it can be realized will take time to wait.

Platform token: ETH

smart contract

Official website:https://www.ethereum.org/

smart contract

Smart contracts can be said to be the greatest invention of Ethereum, and the addition of smart contracts has opened the door to blockchain 2.0 and allowed the entire ecology to develop.

Smart contracts are not as smart as the name sounds. They can be understood as a fixed program, and users can get corresponding results through smart contracts by inputting data. You can refer to the ATM cash machine in the real world to understand, you enter a fixed amount of money, and the machine spits out the corresponding banknotes for you.

DApp

It can be seen from the name that this is a name that is very similar to App. DApp is an App that runs on the blockchain world, and D stands for decentralization, which is an abbreviation for decentralization.

There are many kinds of programs currently running in the blockchain world, but most of them are related to finance, including DEX (decentralized exchange), lending, derivatives, insurance, aggregation transactions, cross-chain, etc. Software, NFT, games and other fields.

Ethereum Ecology

Ethereum Ecology

Ecological map:

At present, the ecology on Ethereum can no longer be clearly counted with accurate quantities. Most of the well-known leading projects in the encryption world today come from the Ethereum platform.

DEFI field:

Chart source: infinito

Chart source: coin98

Chart source: coin98

Ethereum Virtual Machine EVM

If Ethereum wants to become a world computer and create a system where various DApps can run, it needs the support of a virtual machine.

The function of the EVM is to handle the deployment and execution of smart contracts. At present, mainstream public chains are basically compatible with EVM. Many public chains that do not have smart contracts will also take EVM compatibility into consideration when designing smart contracts, such as Filecoin.

Oracle

The oracle machine can be understood as a bridge between the real world and the blockchain world. Ethereum obtains data from the outside world through oracle machines, and executes smart contracts through virtual machines.

The oracle machine only involves the actual acquisition of external data, and does not directly participate in the transaction execution.

consensus mechanism

consensus mechanism

POW and POS.

POW

At present, Ethereum still adopts POW (proof of work), and the block generation time is about 15 seconds, and adjustments have been made when designing the consensus algorithm. The professional ASIC mining machine used to mine Bitcoin on the market cannot be used to mine Ethereum. , so that more ordinary computers can participate in mining fairly, and avoid the phenomenon of centralization in mining.

Due to the short release cycle of Ethereum, forks will occur more frequently. Given that blocks are produced every 15 seconds or so, in many cases the last result cannot be broadcast to the entire network. Ethereum has introduced the ghost protocol, which rewards miners who have dug mines but failed to become the longest legal chain within 7 blocks.

Only the first block of the fork has a reward, the others do not.

POS

The current block generation of Ethereum is still the POW consensus mechanism, but it is changing to the direction of POS (Proof of Stake).

The proof of rights and interests of Ethereum requires users to pledge 32 Ethereum to become nodes, and the system will randomly select nodes to pack blocks. When Ethereum is converted to POS, the previous mining will no longer exist, and it does reduce more energy consumption in terms of environmental protection.

For more proof of rights and interests, if you want to know more in-depth, you can read the official information of Ethereum in the attachment.

Comparison of POW and POS

The practice of POW for more than ten years has proved that it is a very effective consensus algorithm. POS has not yet started to be adopted. It is theoretically safer and more decentralized. The specific situation needs to be proved by the test of time.

token economy

token economy

Ethereum is an inflationary economic model, that is, its tokens have no upper limit on the total amount, and the inflation ratio has been set and written in the contract, and ETH cannot be artificially changed and issued at will.

In early August of this year, the EIP-1559 London upgrade was implemented, introducing a token burning mechanism. So far, more than 710,000 ETH have been burned, with an average of 5.64 per minute.

The introduction of token burning reduces the total daily production of ETH. Although the burning is reduced, the total daily output is still greater than the burning amount at present, so the overall economic model is still deflationary. When daily burning is greater than output, the overall economic model becomes a deflationary model.

Ethereum fork

Forks are a very common phenomenon in the blockchain world. Forks are divided into soft forks and hard forks. Soft forks are temporary and hard forks are permanent.

The most famous hard fork event in the history of Ethereum is the "The DAO" event. Due to the large number of stolen coins from this organization, Ethereum was forced to carry out a hard fork in order to protect assets. Some members of the community disagreed with this hard fork and insisted on maintaining the old chain, and then Ethereum Classic (ETC) appeared.

future outlook

future outlook

There are more and more public chain projects, and every one of them is called an Ethereum killer. Over the years, the so-called Ethereum killers have rotated batch after batch, and only Ethereum has continued to grow and develop in the blockchain world.

Attached reference reading:

Attached reference reading:

1. Ethereum white paper:https://ethereum.org/en/whitepaper/

2. What is Proof of Stake:https://consensys.net/blog/blockchain-explained/what-is-proof-of-stake/

3、How to DeFi：Advanced：https://nigdaemon.gitbook.io/how-to-defi-advanced-zhogn-wen-b/

4. Why early public chain projects should start with PoW:https://www.chainnews.com/articles/816811049492.htm

5. Is the attack cost of PoS much higher than that of PoW? What are the fundamental differences and limitations between the two:https://www.chainnews.com/articles/143271655621.htm

6. Staking Economy: Read through the PoS mechanism, philosophy, great prospects and practical challenges in one article:https://www.chainnews.com/articles/362961647008.htm

7. V God public address: 0xab5801a7d398351b8be11c439e05c5b3259aec9b

8. The hash of V God's transfer of shib transaction: 0xfccd3aec3c5bb9afa7114bb713a2da1c29c4a962afbb86b86e1baf95b69e3114

9. EIP-1559 proposal:https://github.com/ethereum/EIPs/blob/master/EIPS/eip-1559.md

10. View ETH burning data:https://ultrasound.money