What is Ethereum (ETH)?

Ether (ETH) is the native cryptocurrency of the Ethereum blockchain platform. It not only circulates as a digital asset but also serves as a critical economic incentive and operational fuel that powers the entire Ethereum network.

1. What is Ethereum?

Ethereum is an open-source, programmable, and decentralized blockchain platform launched in 2015 by programmer Vitalik Buterin and a group of core developers. Its most prominent technical feature is its support for smart contracts—self-executing agreements that do not require intermediaries. This functionality lays a solid foundation for the development of decentralized applications (dApps).

2. Core Functions of ETH

ETH serves purposes far beyond that of a traditional digital currency. Its core functions include:

• Transaction Fee Payment (Gas Fee) Every operation on the Ethereum network—such as transfers, contract deployment, or interaction—requires computational resources. These resources are paid for with a "Gas Fee," which is settled in ETH. This system ensures efficient allocation of network resources and prevents abuse.

• Store of Value and Medium of Exchange Similar to Bitcoin (BTC), ETH functions as both a store of value and a medium of exchange. It is increasingly being accepted and adopted by businesses and users around the world.

• Key Asset in Decentralized Finance (DeFi) ETH is one of the most essential assets in the rapidly growing DeFi sector on Ethereum. It is widely used in lending, staking, liquidity mining, and decentralized exchanges, among other use cases.

• Staking and Yield Mechanism Following Ethereum’s upgrade to a Proof of Stake (PoS) consensus mechanism, investors can stake ETH to participate in network validation and earn stable returns (typically between 3%–7% annual yield, depending on market conditions). This feature offers cash flow appeal to long-term holders.

3. Future Outlook for ETH

As the second-largest cryptocurrency by market capitalization after Bitcoin, ETH holds a significant position in the blockchain industry thanks to its robust technology and wide-ranging applications. With ongoing technical upgrades—such as sharding and Layer 2 scaling solutions—its use cases continue to expand into areas like NFTs, blockchain gaming, supply chain management, identity verification, and the Internet of Things (IoT).

ETH is not only a foundational pillar of the digital economy but also has the potential to become the core medium for value transfer in a future decentralized world.