Ethereum Explained: How ETH, Staking and Network Upgrades Work

What Ethereum is and what ETH does

Ethereum is a public blockchain for running applications and recording transfers without putting one company in charge of the entire ledger. Ether, usually shortened to ETH, is its native cryptocurrency. Ethereum is the network; ETH is the asset used to pay for network activity and help secure it through staking.

That distinction explains much of the ecosystem. A stablecoin, collectible or lending application can operate on Ethereum without being ETH. Its own rules and risks remain separate from the network underneath it. The market panel above tracks ETH, not the combined value of every application built on Ethereum.

Ethereum remains active as of October 8, 2026. Its development combines improvements to the main blockchain with work on additional networks called layer 2s. The purpose is to support more activity while retaining a broadly verifiable base layer.

Who created Ethereum, and who maintains it?

Vitalik Buterin proposed Ethereum in a 2013 white paper. An early group that included Gavin Wood and Joseph Lubin helped develop the project, which launched its public network in July 2015. The Ethereum Foundation supports research and development, but it does not operate Ethereum as a conventional company operates a product.

Developers propose changes, software teams implement them, and node operators decide which software to run. Validators participate in consensus, the process of agreeing on the ledger. Application developers and users have their own interests in that process. This distributed structure makes coordination an essential part of any major upgrade.

For a comparison with a blockchain whose design emphasizes monetary transfers and a fixed issuance limit, see our Bitcoin profile.

How transactions, gas and finality fit together

Ethereum applications use smart contracts: programs that execute according to their code when called. A wallet signs a transaction, the network checks it, and a block records the resulting changes. This can be a simple transfer or a more complicated interaction involving several contracts.

Ethereum has used proof of stake since the Merge on September 15, 2022. Validators commit ETH and receive rewards for performing their duties. They can receive penalties for failing to participate, while specified contradictory behavior can trigger slashing, which destroys part of their stake.

The protocol divides time into 12-second slots. A selected validator can propose a block during a slot, and other validators vote on the chain. A transaction appearing in a block is different from that block becoming finalized. Finality reflects additional consensus commitments, so a wallet displaying a successful submission is not the same thing as the network completing every settlement step.

Gas measures computational work. The fee depends on the amount of gas used and the applicable price per unit, including the network's base fee and any priority fee. Complex contract interactions generally require more work than straightforward ETH transfers. Demand for limited block capacity can raise the price of that work.

The base fee is burned, meaning that ETH is removed from supply. Priority fees compensate the block proposer. A quoted dollar fee therefore changes with both network conditions and ETH's exchange value. Keeping a small ETH balance available for fees is a practical requirement when interacting directly with the main network.

Supply: why ETH is neither fixed-cap nor always deflationary

ETH does not follow Bitcoin's fixed maximum-supply model. Its supply changes through two main forces: new issuance for proof-of-stake participation and the destruction of fees. The balance between them can change over time.

The Merge ended issuance to proof-of-work miners. Validator issuance continued, with its level depending on the amount of ETH staked. Consequently, an old estimate of daily issuance is not a permanent setting and should not be treated as today's measurement.

When burning exceeds issuance, supply declines over that period. When issuance exceeds burning, it grows. Calling ETH permanently deflationary overlooks this relationship. Increased application usage also does not automatically translate into a specific reduction in supply because the fees users pay, the layer they use and network capacity all matter.

The live market panel provides the supply figures available from the market-data provider. Those figures serve a different purpose from the protocol rules described here: one measures the asset at a point in time, while the other explains how that measurement can change.

Staking ETH involves choices beyond the headline reward

Activating an individual validator requires at least 32 ETH. Running one also involves maintaining suitable software and reliable operations. Following Pectra, eligible validator balances can compound above the original 32 ETH effective-balance ceiling, subject to the updated protocol rules.

Services and pooled arrangements let users participate with smaller amounts or less operational work. That convenience introduces additional parties or contracts. A custodial service controls funds on a customer's behalf; a liquid-staking arrangement may issue a separate token representing a position. Neither should be confused with simply holding ETH in a self-custody wallet.

Rewards vary, and a percentage displayed by a provider is not a guaranteed return in dollars. Fees, validator performance, withdrawal mechanics and the market value of ETH all affect the result. The possibility of earning additional units does not remove the possibility of losing purchasing power.

Layer 2 networks and Ethereum's upgrade history

Ethereum's scaling strategy includes rollups, which process transactions outside the main execution layer and use Ethereum for important security or data functions. This can reduce the cost allocated to each transaction. A rollup is still a distinct network with its own operation, software and withdrawal arrangements.

Moving assets between networks may require a bridge. Users need to check both the destination network and the asset representation they will receive. A familiar wallet address alone does not establish that a service supports the intended chain. Our guide to Polygon's MATIC-to-POL transition illustrates why network and token names need careful handling.

Several upgrades explain Ethereum's present design. London introduced the base-fee burn in August 2021. The Merge replaced mining in September 2022. Shapella enabled staking withdrawals in April 2023, while Dencun introduced blob transactions in March 2024 to improve the economics of rollup data.

Pectra followed on May 7, 2025, with changes affecting validators and account functionality. Fusaka activated on December 3, 2025, including PeerDAS, a method for checking data availability without requiring each participating node to download all blob data.

As checked on October 8, 2026, Ethereum's official roadmap still describes Glamsterdam as an upcoming upgrade, with an unconfirmed mainnet date. Its proposed changes include reorganizing how blocks are built and verified. A roadmap target is not an activated feature, and this profile does not assume those changes are already live.

The risks sit at several different levels

Holding ETH exposes a user to market volatility. Using an application adds another layer of risk: a contract can contain a bug, an administrator may retain special powers, or a financial position may be liquidated under its rules. The blockchain can correctly execute an instruction that produces an unwanted outcome for the person who signed it.

Wallet security is equally important. A recovery phrase can give someone control over the associated accounts. Fake support messages, imitation sites and misleading signing requests can defeat a careful user without breaking Ethereum's consensus mechanism. Review the full destination address, network and requested permissions before approving a transaction.

External data is another dependency. Contracts that need prices or other information from outside the blockchain rely on mechanisms called oracles. Our Chainlink explainer describes why delivering that information is a separate technical problem.

Ethereum is best understood by separating these responsibilities: the base network establishes a shared record, ETH funds and secures its operation, and individual applications determine what users can do with it. That separation helps explain both the platform's flexibility and why the safety of one component cannot establish the safety of every other component.