What is Ethereum?

Ethereum is a Blockchain that is similar to Bitcoin but has some major features that are missing on Bitcoin, lets visit Wikipedia for a Basic Understanding:

Ethereum is a decentralized, open-source blockchain featuring smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform. It is the second-largest cryptocurrency by market capitalization, after Bitcoin.  Ethereum is the most actively used blockchain in the world.

Ethereum was proposed in 2013 by programmer Vitalik Buterin. Development was crowdfunded in 2014, and the network went live on 30 July 2015, with 72 million coins premined. The Ethereum Virtual Machine (EVM) can execute Turing-complete scripts and run decentralized applications. Ethereum is used for decentralized finance, and has been utilized for many initial coin offerings.

Lets also Highlight a few Key difference between Bitcoin and Ethereum:
– Ethereum is a Smart Contract Platform, as of now there is not the same Smart Contract functionality on BTC. Bitcoin is by most Users seen as a Store of Value, some people may not finnd this to be accurate due to high volatility.
– Block Time on Ethereum is 10-15 Seconds, compared to Bitcoin where it is aprox. 10 Minutes, therefore offers much faster transaction speed.
– The Ethereum Virtual Machine (EVM) is the runtime environment for smart contracts in Ethereum, where such thing is not present in Bitcoin at all.
– Alltough as of right now the Ethereum Blockchain is based on Proof-of-Work(PoW) it is transitioning to Proof-of-Stake(PoS) with the the launch of Ethereum 2.0 which firs of three Phases startet at 1. December 2020
– Transaction costs are calculated different on Ethereum by computational complexity, bandwidth use, and storage needs (in a system known as gas), while bitcoin transactions compete by means of transaction size in bytes.
– Bitcoin is hardcapped to 21 Million Coins that are emissioned by mining, as of right now the supply of Ethereum can be infinite, this is about to Change with ETH 2.0

Ethereum DAO Event

In 2016 there was made a decentralized autonomous organization (DAO) which was a set of Smart Contracts that should be used to provide a new decentralized business model for organizing both commercial and non-profit enterprises. The DAO was stateless, and not tied to any particular nation state. The DAO was undergoing a Crowdfunding Campaign and raised a record of $ 150 Million! A Record at that Time!

However the DAO was ahead of its Time and got exploited for $ 50 Million worth of DAO Tokens by an unknown Hacker in Mid 2016. The Blockchain Community could not reach consensus about how to Handle this event. There was one group that was seeing the Solution for this in a Hardfork of the Ethereum Blockhain, rendering the loot of the Hacker useless. However it took very long to execute this Hard Fork, in the meantime Miners was still working on the original Chain and refused to move to the Hard Fork, this resulting in a two Ethereum Chains, the old one was called Ethereum Classic from now on. The Ethereum Classic Community believed that Code is law and therefore this event should not be reversed. Since then the ETC/Ethereum-Classic was target of multiple successfull 51% attacks. The new Chain which was forked at 1920000 is now called Ethereum and has reverted the Hack and the occured loss of Tokens.

Decentralized Finance(DeFI) on Ethereum

Even with the DAO Event Ethereum has continued to blossom and the Community has learned from this Event. The possibility to execute Touring Complete Code on Ethereum is bringing many interesting Apps and Projects to the Platform, here is a few notable examples in alphabetical Order:

  • Aave – open source and non-custodial liquidity protocol
  • Balancer – Balancer is a protocol for programmable liquidity
  • Bancor – on-chain liquidity protocol
  • Chainlink – decentralized oracle network
  • Compound – algorithmic, autonomous interest rate protocol
  • Cover Protocol – peer-to-peer coverage market
  • Curve – Liquidity Pools & decentralized exchange
  • Dodo – on-Chain Liquidity Provider
  • Gnosis – create, trade, and hold digital assets
  • dy/dx – decentralized exchange as well as borrowing and lending functionality
  • Maker DAO – Multi-Collateral Dai (MCD) System
  • Matcha.xyz – defi aggregator, search 17 exchanges at once for best liquidity and price
  • REN – open protocol providing access to inter-blockchain liquidity for all decentralized applications
  • Sushiswap – Liquidity Pools & decentralized exchange
  • Synthetix Network – derivatives trading in DeFi
  • Uniswap – Liquidity Pools & decentralized exchange
  • wBTC – Wrapped Bitcoin was the first ERC20 token backed 1:1 with Bitcoin
  • yearn.finance – provides lending aggregation, yield generation, and insurance
  • Zapper – Manage your DeFi assets and liabilities

You can find many interesting more DeFi Projects, not only built on Ethereum at Coingecko.

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