What is Ethereum?

How Ethereum works

Ethereum works like a shared global computer: anyone can deploy a smart contract to it, and every node runs the same code and reaches the same result. Tokens, decentralized exchanges, lending apps and NFTs are all built from these contracts.

Since September 2022, after an upgrade called The Merge, Ethereum uses proof of stake. Validators lock up ETH to propose and confirm blocks instead of mining them with computing power, which cut the network’s energy use dramatically.

What ETH is used for

Ether is the native coin of Ethereum, and you need it for almost everything on the network:

• Paying gas, the fee for every transfer or contract call
• Sending ERC20 tokens such as USDT, which still requires ETH for the fee
• Staking, where validators lock ETH to secure the network
• Paying gas on Ethereum layer 2 networks such as Arbitrum, Optimism and Base

Ethereum, EVM networks and layer 2s

Many other networks copy Ethereum’s design, the Ethereum Virtual Machine (EVM), including BNB Smart Chain, Polygon and Avalanche, while layer 2 networks such as Arbitrum, Optimism and Base process transactions more cheaply and settle back to Ethereum. They all use the same style of 0x address, but each network keeps its own separate balances.

That is the most common source of mistakes: a token sent on BNB Smart Chain arrives on BNB Smart Chain, not on Ethereum. Always pick the network the receiver asked for, and keep a little of that network’s gas coin.

Ethereum in Waletifi

Waletifi supports Ethereum and six other EVM networks with one 0x address on the standard derivation path, so your 24-word phrase restores it in other standard EVM wallets. Gas is shown in your local currency before you confirm, and the review screen warns you if you are about to send a token to its own contract address.