Ethereum & Smart Contracts
Ethereum: The World Computer
Ethereum, launched in 2015 by Vitalik Buterin and team, revolutionized blockchain by introducing smart contracts—self-executing programs that enable complex applications beyond simple value transfer.
Key Innovations
- Smart Contracts: Programmable agreements that execute automatically
- EVM (Ethereum Virtual Machine): Decentralized computing environment
- Gas System: Fee mechanism that prevents spam and infinite loops
- Account Model: Externally owned accounts and contract accounts
- Composability: DeFi "money legos" that interact seamlessly
Ethereum Network Statistics (2025)
ETH Staked
Validators
Staking APR
Gas Fees (L1)
L2 Fees
Energy Use
Where to Find Current Data
- Etherscan: Transactions, contracts, gas tracker
- Ultrasound.money: ETH supply and burn metrics
- L2Beat: Layer 2 TVL and metrics
- Beaconcha.in: Validator and staking data
Understanding Smart Contracts
Smart contracts are programs stored on the blockchain that automatically execute when predetermined conditions are met. They power everything from DeFi protocols to NFTs.
Simple Smart Contract Example
Here's a basic storage contract written in Solidity:
pragma solidity ^0.8.0;
contract SimpleStorage {
uint256 public storedNumber;
function store(uint256 _number) public {
storedNumber = _number;
}
function retrieve() public view returns (uint256) {
return storedNumber;
}
}
This contract can:
- Store a number on the blockchain
- Retrieve that number anytime
- Be called by anyone with ETH for gas
- Never be changed or deleted once deployed
Real-World Smart Contract Uses
- DeFi Protocols: Lending, borrowing, trading (Aave, Uniswap)
- Stablecoins: Algorithmic and collateralized (DAI, USDC)
- NFTs: Digital art, gaming items, memberships
- DAOs: Decentralized governance and treasuries
- Insurance: Parametric and peer-to-peer coverage
The Merge & Proof of Stake
On September 15, 2022, Ethereum transitioned from Proof of Work to Proof of Stake, reducing energy consumption by 99.95% while improving security and enabling future scalability.
Staking on Ethereum
- Solo Staking: Run a validator with 32 ETH
- Staking Pools: Stake any amount (Lido, Rocket Pool)
- Exchange Staking: Stake through Coinbase, Kraken, etc.
- Liquid Staking: Get stETH, rETH tokens to use in DeFi
Post-Merge Improvements
- Energy Efficiency: 99.95% reduction in power usage
- ETH Issuance: ~90% reduction, often deflationary
- Security: Higher cost to attack the network
- Withdrawals Enabled: Shanghai upgrade (2023) allowed unstaking
- MEV Rewards: Validators earn from transaction ordering
Gas Fees Explained
Gas Fee Calculator
Gas Optimization Tips
- Use Layer 2s: 90-95% cheaper than mainnet
- Time Transactions: Weekends often have lower fees
- Batch Operations: Combine multiple actions
- Set Priority Fees: Balance speed vs cost
Layer 2 Scaling Solutions
Layer 2s process transactions off-chain and batch them to Ethereum, offering near-instant transactions at a fraction of the cost.
| Layer 2 | TVL | TPS | Fees | Type |
|---|---|---|---|---|
| Arbitrum | $3-4B | 40,000 | $0.01-0.10 | Optimistic Rollup |
| Base | $3-4B | 2,000+ | $0.01-0.05 | Optimistic Rollup |
| Optimism | $2-3B | 2,000+ | $0.01-0.10 | Optimistic Rollup |
| zkSync | $500M-1B | 10,000+ | $0.01-0.05 | ZK Rollup |
| Polygon zkEVM | $100-500M | 2,000+ | $0.01-0.03 | ZK Rollup |
Rollup Technologies
- Optimistic Rollups: Assume transactions valid, 7-day withdrawal
- ZK Rollups: Cryptographic proofs, instant finality
- Data Availability: Calldata on L1, future sharding
- EIP-4844: Blob space reducing L2 costs further
Ethereum DeFi Ecosystem
Ethereum hosts the largest DeFi ecosystem with $50B+ TVL across thousands of protocols.
Lending
Aave, Compound, Morpho
DEXs
Uniswap, Curve, Balancer
Derivatives
GMX, dYdX, Synthetix
Stablecoins
USDC, USDT, DAI
Liquid Staking
Lido, Rocket Pool, Frax
Yield
Yearn, Convex, Pendle
Insurance
Nexus Mutual, Unslashed
NFT Markets
OpenSea, Blur, Rarible
Composability in Action
Example DeFi strategy combining multiple protocols:
- Stake ETH on Lido → receive stETH
- Deposit stETH on Aave as collateral
- Borrow USDC against stETH
- Provide USDC-USDT liquidity on Curve
- Stake Curve LP tokens on Convex for boosted rewards
2025 Ethereum Roadmap
Upcoming Upgrades
- Fusaka (Nov 2025): 11 EIPs including gas limit increase to 150M
- Account Abstraction: Smart contract wallets, gasless transactions
- Proto-Danksharding: Cheaper L2s through data blobs
- Single Slot Finality: 12 second transaction finality
- Statelessness: Light clients and better scalability
Innovation Areas
- EigenLayer: Restaking for additional yield and security
- MEV Solutions: PBS, MEV-burn proposals
- Cross-chain: Better bridges and interoperability
- Privacy: ZK technology integration
⚠️ Ethereum Risks to Consider
• Smart Contract Bugs: Code vulnerabilities can lead to losses
• Gas Spikes: Fees can surge during high demand
• MEV: Front-running and sandwich attacks
• Centralization Concerns: Lido controls ~30% of staked ETH
• Regulatory Uncertainty: Staking and DeFi regulations evolving
✅ Ethereum Best Practices
• Always verify contract addresses on Etherscan
• Test transactions with small amounts first
• Use hardware wallets for large holdings
• Consider Layer 2s for frequent transactions
• Monitor gas prices before large operations