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Ethereum Fundamentals

Ethereum is a global, decentralized computer network that runs programs called smart contracts and settles value transfers in its native asset, ether (ETH). Unlike Bitcoin, which is designed primarily as a digital currency, Ethereum is a programmable blockchain: anyone can deploy code to it, and that code executes exactly as written, without downtime, censorship, or third-party interference.

This page maps the entire territory of Ethereum fundamentals. For each major area, you will find a clear explanation and a link to a dedicated article that answers the specific question you came with. Use the table of contents or just scan the sections below to find your topic.

What makes ethereum run: gas, transactions, and fees

Every operation on Ethereum costs something. That cost is measured in gas, and it is the single most important mechanical concept on the network.

Gas is the unit of computational effort. Every instruction the Ethereum Virtual Machine (EVM) executes - adding two numbers, reading a storage slot, calling another contract - has a fixed gas cost. A simple ETH transfer costs 21,000 gas. A complex DeFi interaction that touches multiple contracts might cost 200,000 gas or more. You pay for gas in ETH, at a rate determined by supply and demand for block space.

The article What is gas in Ethereum and how does it work explains exactly how gas is metered, why you set a gas limit, and what happens when you run out.

When you click "Send" in your wallet, a lot must happen before your transaction is final. Your wallet constructs a signed message containing the recipient, the value, the data, a nonce (a sequence number that prevents double-spending), a gas limit, and a fee. That signed message goes to the public mempool - a queue of pending transactions visible to everyone. Validators pick transactions from the mempool, execute them, and include them in blocks.

The article What happens when you send an Ethereum transaction walks you through every step: submission, mempool propagation, block inclusion, execution, and the gradual finality that follows.

Fees on Ethereum follow EIP-1559, which replaced the old first-price auction. Every block has a base fee that adjusts up or down based on how full the previous block was. You pay that base fee (which is burned - removed from circulation) plus an optional priority fee (tip) to validators for including your transaction. During congestion, base fees can spike dramatically, and your transaction might sit pending for hours if you set your priority fee too low.

The article How to fix a stuck Ethereum transaction that is pending for hours gives step-by-step instructions for replacing or canceling a transaction that won't confirm.

Common fee-related errors include:

Consensus: how validators secure the network

Ethereum uses proof-of-stake (PoS). Validators - participants who have deposited 32 ETH into the deposit contract - take turns proposing blocks and attesting to the blocks they see. The network is organized into 12-second slots and 32-slot epochs (about 6.4 minutes). In each slot, one validator is pseudo-randomly chosen to propose a block; a committee of other validators attests to it.

The article How does proof of stake work on Ethereum explains attestation mechanics, finality (the point at which a block cannot be reverted), and what happens when a validator misbehaves - slashing destroys part of their stake.

Key comparisons: - Proof-of-stake vs proof-of-work - Ethereum's transition from mining to staking reduced energy consumption by ~99.95% and changed the security model from compute-based to stake-based. The comparison section in the PoS article covers the tradeoffs. - Solo staking vs pooled staking - Running your own validator requires 32 ETH, technical skill, and uptime responsibility. Services like Lido and Rocket Pool allow staking with any amount of ETH through liquid staking tokens (stETH, rETH). The How to stake Ethereum comparing Lido Rocket Pool and solo staking article breaks down the risks, returns, and decentralization tradeoffs of each option.

Blob-carrying transactions (part of the Dencun upgrade) introduced a separate fee market for data blobs that layer 2 rollups use to post transaction data. Blob gas is distinct from execution gas and has its own base fee adjustment mechanism. This reduces costs for L2s while keeping L1 blocks lean.

Wallets, custody, and security

Your ETH and tokens are not "inside" your wallet - they exist on the blockchain, and your wallet holds the private key that controls them. Lose that key, lose your funds. This simple fact governs every security decision you make.

Seed phrases and keys

Your seed phrase (12 or 24 words) is the master key to your wallet. Anyone who has it can derive every private key your wallet controls and move every asset. It is not the same as a private key - the seed phrase generates all your private keys deterministically. Protect it as you would a physical key to a vault.

The article How to protect your Ethereum wallet seed phrase from theft covers physical backup methods (steel plates vs paper vs social recovery), the risks of digital storage (screenshots, cloud backups, password managers), and the difference between a seed phrase and a private key.

Wallet Types

You can choose between:

The article EOA vs smart contract wallet on Ethereum which is better helps you decide which model fits your needs.

The MetaMask vs Rabby wallet for Ethereum which should I use article compares the two most popular browser wallets on features like transaction simulation (Rabby shows you what a contract call will do before you sign), swap routing, and phishing detection.

For hardware wallets, the Ledger vs Trezor hardware wallet for Ethereum which is safer article examines their security models: Ledger uses a secure element chip but has the controversial Ledger Recover key-sharing option; Trezor uses an open-source firmware design but lacks a secure element. Both are far safer than software wallets for significant holdings, but neither makes you immune to scams.

Token approvals and scams

This is where most people lose money on Ethereum. When you use a DeFi app, you typically sign an approve transaction granting that app permission to spend your ERC-20 tokens. The app can then move your tokens without asking again. If the app is malicious or compromised, it can drain your entire allowance.

The article What are token approvals and why are they dangerous explains the approve-and-transferFrom pattern, the difference between finite and infinite approvals, and how to use tools like Revoke.cash to audit and revoke allowances.

The How to fix ERC-20 insufficient allowance error on Ethereum article covers what to do when a transaction fails because you haven't approved enough tokens.

Common scam techniques: - Clipboard hijack - malware replaces a copied address with the attacker's address. - Phishing site signature request - a fake site asks you to sign a permit message (EIP-2612) that allows it to spend your tokens without gas. - Ice phishing - tricking you into signing a transferFrom approval by disguising it as something harmless. - Address poisoning - the attacker sends you a zero-value token transaction from an address that looks like one you've used before, hoping you'll copy that address next time.

Sandwich attacks target DEX swaps. A bot sees your swap transaction in the mempool, buys the token ahead of you (driving up the price), and sells immediately after you execute at the higher price - extracting value from your slippage tolerance. The What is a sandwich attack on Ethereum and how to avoid it article explains how to protect yourself: use a private mempool like Flashbots Protect, set tight slippage limits, or use RPC endpoints that route through MEV protection.

Smart contracts, defi, and error handling

Smart contracts are the programs that run on Ethereum. They hold ETH and tokens, enforce rules, and can call each other in complex chains. When a contract call fails, it typically reverts - undoing all state changes and consuming the gas spent up to the failure point.

Common errors and their fixes

Beyond out-of-gas and insufficient-funds errors, the most frequent failures include:

DeFi Protocols

Major protocols you will encounter:

The What does slippage exceeded mean on Ethereum swaps article includes a section specific to Uniswap's slippage settings. The How to fix ERC-20 insufficient allowance error on Ethereum article uses Aave's deposit flow as a running example.

Layer 2 Rollups and Scaling

Ethereum's base layer (L1) can process roughly 15-30 transactions per second. That is not enough for global adoption. Layer 2 rollups solve this by executing transactions off-chain and posting compressed data (or validity proofs) to L1.

Two main types: - Optimistic rollups (Arbitrum, Optimism) - assume transactions are valid but allow a fraud-proof window (typically 7 days) for anyone to challenge a suspicious claim. - ZK rollups (zkSync, StarkNet) - generate a cryptographic validity proof for each batch; L1 verifies the proof instantly. No fraud-proof delay.

The article What are Ethereum layer 2 rollups and how do they work explains the security models, the withdrawal delays, and the tradeoffs between optimistic and ZK approaches.

Because L2s post data to Ethereum's blob space (via the proto-danksharding introduced in Dencun), their fees are much lower than L1. However, they add complexity: you need to bridge assets into the L2, manage different network IDs in your wallet, and understand withdrawal timelines. Bridging between L1 and L2 typically takes minutes for deposits but days for optimistic rollup withdrawals (the challenge period).

Deeper mechanics (for advanced readers)

EVM and State

The Ethereum Virtual Machine is a stack-based machine that executes bytecode. Every operation has a fixed gas cost defined in EIP-2200 and subsequent revisions. Key costs:

The state trie is a Merkle-Patricia tree that stores all account balances, contract code, and storage. Verkle trees are being designed to replace it, enabling stateless clients that can verify blocks without storing the full state.

Contract Features

MEV and block building

Maximal Extractable Value (MEV) is the profit validators or searchers can extract by reordering, including, or excluding transactions within a block. Common strategies: sandwich attacks, frontrunning, backrunning.

MEV-Boost separates block production from block proposal. Validators outsource block building to relays that assemble blocks from searcher bundles. This has led to concerns about relay censorship - some relays refuse to include transactions interacting with certain protocols (e.g., Tornado Cash). Validators can choose which relays to use, but most use the default set.

The What is a sandwich attack on Ethereum and how to avoid it article covers MEV from the user perspective and recommends Flashbots Protect as a private mempool to avoid public-mempool extraction.

The future: verkle trees and statelessness

Ethereum is migrating from the Merkle-Patricia trie to Verkle trees, which produce much smaller proofs for verification. This enables stateless clients - nodes that can verify blocks without storing the full state, only a witness. This dramatically lowers the hardware requirements for running a node and improves decentralization.

The EVM Object Format (EOF) is a proposed container format for contract bytecode that enforces stricter validation, enables better optimization, and breaks backward compatibility with legacy bytecode. Still in design; volatile.

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