What Is Ethereum?
Ethereum (ETH) is the world’s leading programmable blockchain, founded by Vitalik Buterin and launched in 2015. Unlike Bitcoin, which is primarily a store of value and payment network, Ethereum is a platform for decentralised applications (dApps), smart contracts, DeFi protocols, NFTs, and Layer 2 scaling networks. It is the infrastructure layer on which the majority of Web3 is built.
Ethereum transitioned from proof of work to proof of stake in September 2022 in an upgrade called The Merge. This reduced Ethereum’s energy consumption by over 99% and introduced staking as the consensus mechanism. ETH holders can now stake their tokens to earn approximately 3.2% annual yield while securing the network. Over 33 million ETH is currently staked, representing roughly 27% of the total supply.
What Drives the Ethereum Price?
- DeFi and stablecoin activity. Ethereum controls 68% of all DeFi total value locked as of March 2026. Higher on-chain activity increases fee burn and reduces ETH supply.
- L2 ecosystem growth. Base, Arbitrum, Optimism, and zkSync process billions in daily transactions, all settling to Ethereum. L2 growth directly validates Ethereum as a settlement layer.
- Staking demand. As more ETH is staked, the circulating liquid supply shrinks. The Ethereum Foundation’s March 2026 deposit of 20,470 ETH into the Beacon Chain was interpreted as a confidence signal.
- Institutional products. BlackRock’s staked ETH ETF, approved in 2025, allows institutional investors to earn staking yield through a regulated product. Inflows into this product directly reduce liquid ETH supply.
- Protocol upgrades. Upcoming Ethereum upgrades targeting blob throughput and validator UX improvements are expected to reduce L2 settlement costs further, accelerating adoption.
Ethereum vs. Bitcoin: Key Differences
| Feature | Bitcoin | Ethereum |
|---|---|---|
| Primary use | Store of value, payments | Smart contracts, dApps, DeFi |
| Supply | Fixed at 21 million | No hard cap, deflationary via burn |
| Consensus | Proof of Work | Proof of Stake |
| Yield | None | ~3.2% staking APY |
| Programmability | Limited (Bitcoin Script) | Full Turing-complete EVM |
| Market cap rank | #1 | #2 |
How to Buy and Stake Ethereum
Ethereum is available on all major exchanges including Coinbase, Kraken, and Binance. After purchasing, you can stake ETH directly through a liquid staking protocol like Lido to earn yield without locking 32 ETH solo. Store ETH securely using a MetaMask software wallet or a Ledger hardware wallet.