Ethereum, proposed by Vitalik Buterin and launched in July 2015, generalised what Bitcoin started: instead of a ledger that only tracks coin balances, Ethereum runs a full programmable virtual machine, letting developers deploy 'smart contracts' — self-executing code that anyone can call. That single design choice is why most of DeFi, NFTs, stablecoins and on-chain tokenisation activity happens on Ethereum or chains built to be compatible with it.
Category
layer-1
Consensus mechanism
Proof of Stake
Launched
2015
From proof-of-work to proof-of-stake
Ethereum launched using proof-of-work, the same mining-based model as Bitcoin, but completed a multi-year transition to proof-of-stake in September 2022, an event known as The Merge. Under proof-of-stake, validators lock up (stake) ETH as collateral and are chosen to propose and attest to blocks; acting dishonestly risks having that stake destroyed ('slashed'), replacing energy-intensive mining with an economic-security model.
The Merge also changed Ethereum's issuance dynamics: combined with EIP-1559, a 2021 upgrade that burns a portion of every transaction fee, ETH's net issuance can be flat or even negative (deflationary) during periods of high network usage, though this varies with demand rather than following a fixed schedule.
Smart contracts and the wider ecosystem
Ethereum's programmability underpins decentralised exchanges, lending protocols, stablecoins (both USDT and USDC are issued on it, among other chains) and NFT marketplaces. Because so much value and tooling has accumulated on Ethereum, a wide family of 'EVM-compatible' chains and layer-2 rollups (including Arbitrum and Polygon, both covered on this site) run software designed to be compatible with Ethereum's virtual machine, letting the same contracts and wallets work across networks.
This composability is a double-edged sword: it enables rapid innovation, but smart-contract bugs and exploits have caused some of the largest losses in crypto history, and users interacting with unaudited or unfamiliar contracts carry that risk directly.
Tokenomics
| circulating-supply | — |
|---|---|
| max-supply | — |
| issuance-model | No fixed cap; proof-of-stake validator issuance is partially offset by EIP-1559 fee-burning, so net issuance varies with network usage |
Last verified: 8 July 2026. before you rely on any figure — live circulating supply and market cap are never published here; check a live tracker.
Risks & criticisms
- Smart-contract risk is real and asset-specific — a bug in a protocol you interact with can result in permanent loss, independent of ETH's own price.
- Gas fees (the cost to transact) can spike sharply during network congestion, though layer-2 rollups have reduced this for many use cases.
- ETH has no fixed supply cap, and its issuance/burn dynamics depend on usage, which is a different monetary model to Bitcoin's fixed schedule — worth understanding before comparing the two directly.
Where to buy
Related buying guide
→ Ethereum — related buying guideFrequently asked questions
Is Ethereum proof-of-work or proof-of-stake?
Proof-of-stake, since it completed The Merge in September 2022. It ran on proof-of-work from its 2015 launch until that transition.
Does Ethereum have a maximum supply like Bitcoin?
No. There is no hard cap; issuance depends on staking rewards and is partially offset by fee-burning under EIP-1559, so net supply changes vary with network activity.
What is 'gas' on Ethereum?
Gas is the fee paid to have a transaction or smart-contract call processed by the network, priced in a small unit of ETH (gwei) and varying with network demand.