Ethereum Review: The Programmable Blockchain Powering the Decentralized Web

No blockchain has shaped the decentralized web more than Ethereum. It introduced smart contracts, gave rise to DeFi, made NFTs possible, and created the infrastructure for thousands of Web3 applications. More than a decade after its conception, Ethereum remains the world’s largest programmable blockchain by developer activity, total value locked, smart contract deployments, and institutional adoption.

Ethereum in 2026 is very different from the protocol launched in 2015. Its transition from energy-intensive Proof of Work to Proof of Stake in 2022 reduced energy consumption by 99.95%. Its rollup-centric scaling strategy moved most transaction activity to Layer-2 networks and lowered user costs. The Pectra upgrade in May 2025 — the largest in Ethereum’s history by EIP count — introduced smart accounts, expanded staking limits, and doubled Layer-2 throughput. The 2026 calendar, with Glamsterdam and Hegotá, points to a protocol entering a phase of disciplined, biannual improvement.

This review covers what Ethereum is, how it works, its ecosystem, the latest upgrades, the roadmap ahead, developer tools, staking, key use cases, competitors, and its risks.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency is a high-risk asset class.

Ethereum at a Glance

What Is Ethereum?

Vitalik Buterin proposed Ethereum in a 2013 whitepaper as an answer to Bitcoin’s limitations. Bitcoin was designed as a peer-to-peer payment system. Buterin envisioned a programmable blockchain — a global computer where anyone could deploy self-executing programs called smart contracts. The blockchain would provide the trust layer, while smart contracts would replace intermediaries.

The idea was straightforward: code running automatically on a decentralized network could be enforced by cryptography rather than legal contracts. That would allow financial services, governance, identity, and commerce to be rebuilt without intermediaries taking a share of every transaction.

Ethereum launched its mainnet on July 30, 2015. Its founding team included Buterin, Gavin Wood (who later founded Polkadot), Joseph Lubin (who later founded ConsenSys), and several others. Wood authored the Yellow Paper — the formal technical specification of the Ethereum Virtual Machine (EVM) — and created Solidity, Ethereum’s primary smart contract programming language.

Since its 2015 launch, Ethereum has become the foundational layer of what is now called Web3. It supports a decentralized internet where users own their data, assets, and digital identity instead of surrendering them to platform companies.

How Ethereum Works

The Ethereum Virtual Machine (EVM)

At Ethereum’s core is the Ethereum Virtual Machine — a global, decentralized computer that executes smart contract code identically across thousands of nodes worldwide. When a developer deploys a smart contract, its bytecode is stored permanently on the blockchain. Any user can trigger it through a transaction. The EVM ensures that the same code produces the same result on every node, providing the deterministic, trustless execution that smart contracts require.

The EVM has become an industry standard. More than 100 blockchain networks — including BNB Chain, Polygon, Avalanche, Arbitrum, Optimism, and Base — are EVM-compatible. Smart contracts written for Ethereum run identically on these chains. This composability has made the EVM the de facto programming environment for Web3 development worldwide.

Proof of Stake — The Merge

On September 15, 2022, Ethereum completed the Merge, transitioning from Proof of Work (PoW) to Proof of Stake (PoS). The migration replaced energy-intensive mining with a validator-based staking system without disrupting the world’s second-largest blockchain or the billions of dollars in DeFi built on it.

Under Proof of Stake, validators secure the network by staking ETH as collateral instead of using electricity. Validators are selected to propose and attest to blocks in proportion to their stake. If a validator acts dishonestly — for example, by approving two conflicting blocks simultaneously — it is slashed and loses part or all of its staked ETH.

The Merge reduced Ethereum’s energy consumption by approximately 99.95%. It changed Ethereum from one of the most energy-intensive networks in crypto into one of the most energy-efficient. The change removed Ethereum’s most significant ESG objection and opened the door to institutional participation that would have been untenable under PoW.

Gas and Fees — EIP-1559

Ethereum transactions require gas, a unit that measures the computational work needed to execute an operation. Gas is paid in ETH and denominated in gwei, a fraction of ETH. Prices change with network demand. During major NFT mints or market volatility, gas prices spike; during quiet periods, they approach near-zero.

EIP-1559, implemented in August 2021, changed Ethereum’s fee model. Before EIP-1559, miners received all gas fees. Afterward, fees were split between a base fee and a priority tip. The base fee is set algorithmically according to network congestion and permanently burned, while the priority tip goes to validators. During periods of high activity, more ETH can be burned than issued, making ETH net deflationary.

The Ethereum Upgrade Roadmap

Ethereum’s development is organized around six conceptual phases, each focused on a different part of the protocol’s long-term vision. Progress is non-linear, with several phases advancing at once through a series of hard fork upgrades.

The Six Phases

The Merge — Completed September 2022. Transition from Proof of Work to Proof of Stake. It was the foundation for everything that followed.

The Surge — Ongoing. Scaling Ethereum through rollups and data availability improvements. The goal is 100,000+ transactions per second across the ecosystem through L2 networks, with Ethereum L1 serving as the secure data availability and settlement layer.

The Scourge — Ongoing. Addressing MEV (Miner/Maximal Extractable Value) and maintaining censorship resistance at the protocol level. Key work includes Proposer-Builder Separation (PBS) and inclusion fairness mechanisms.

The Verge — Future. Implementing Verkle Trees, a cryptographic data structure that replaces Merkle Trees and enables stateless clients. Stateless clients would let validators run nodes without storing the full Ethereum state, lowering hardware requirements and enabling decentralization at scale.

The Purge — Future. Simplifying the protocol by removing historical data burdens and technical debt. State expiry would stop the blockchain’s storage requirements from growing indefinitely.

The Splurge — Future. Final refinements, including advanced account abstraction, EVM improvements, and miscellaneous protocol polishing. It is the “everything else” phase that helps the other phases work smoothly.

Recent Upgrades

Dencun (March 2024): Introduced proto-danksharding through EIP-4844, which created “blobs” — a new type of data storage designed for Layer-2 rollup data. Blobs are stored temporarily rather than permanently and cost a fraction of regular calldata. As a result, L2 transaction fees dropped by 85–95% overnight, driving a major increase in L2 activity and user adoption.

Pectra (May 7, 2025): Ethereum’s largest-ever upgrade by EIP count activated 11 Ethereum Improvement Proposals simultaneously. Key changes:

• EIP-7702 (Account Abstraction): Allows regular wallets (Externally Owned Accounts) to temporarily behave as smart contracts. This enables gasless transactions, transaction batching, and “Web2-like” UX without requiring users to migrate to full smart contract wallets. It is the most significant UX improvement in Ethereum’s history.
• EIP-7251 (Staking Limit Expansion): Raised the maximum validator stake from 32 ETH to 2,048 ETH, allowing large stakers to consolidate multiple validators into fewer nodes. This reduces node sprawl for institutional validators while enabling auto-compounding of rewards.
• EIP-7691 (Blob Throughput Increase): Doubled the number of data blobs per block from 3 to 6, further reducing L2 costs and increasing L2 throughput capacity.
• EIP-7002 (Validator Exit Reform): Allows validator exits and partial withdrawals to be triggered from the execution layer, reducing reliance on “hot” signing keys and improving institutional security.

Fusaka (Late 2025): The Fusaka upgrade introduced PeerDAS (Peer Data Availability Sampling) to improve data availability for Layer-2 rollups. PeerDAS lets validators verify availability by sampling random portions of data instead of downloading full blobs. This reduces validator node hardware requirements while increasing the volume of data Ethereum can handle.

2026 Upgrade Calendar

Glamsterdam (H1 2026): A major upgrade targeting parallel transaction execution, which processes multiple transactions simultaneously instead of sequentially, and raising the gas limit toward and beyond 100 million. It also includes enshrined Proposer-Builder Separation (ePBS) and continued blob capacity expansion. Parallel execution alone could multiply Ethereum L1 throughput several times over.

Hegotá (H2 2026): Focused on privacy, censorship resistance, and potentially Verkle Trees. Fork-Choice Enforced Inclusion Lists (FOCIL) would prevent validators from censoring specific transactions. If included, Verkle Trees would reduce node storage requirements by an estimated 90%, making it feasible to run a full Ethereum node on a standard laptop.

The Ethereum Ecosystem

Ethereum has the largest and most diverse ecosystem in Web3. It spans DeFi, NFTs, gaming, identity, infrastructure, and enterprise applications, all connected through the EVM’s shared programmability.

DeFi — Decentralized Finance

Ethereum is the birthplace of DeFi and still holds most of the total value locked across blockchain networks. Its core DeFi categories include:

Lending & Borrowing: Aave and Compound pioneered algorithmic lending on Ethereum. Users deposit assets as collateral and borrow against them, while smart contracts set interest rates according to supply and demand. No credit checks, banks, or KYC are required.

Decentralized Exchanges (DEXs): Uniswap, invented on Ethereum in 2018, created the automated market maker (AMM) model. It replaced order books with liquidity pools governed by mathematical formulas. Uniswap processes billions of dollars in daily volume entirely through smart contracts.

Stablecoins: DAI (MakerDAO) was the first decentralized stablecoin. It maintains its $1 peg through over-collateralization with crypto assets rather than dollar reserves. USDC and USDT are also primarily issued and used on Ethereum.

Liquid Staking: Lido Finance and Rocket Pool let users stake ETH and receive liquid tokens (stETH, rETH) that can be used in DeFi while the underlying ETH earns staking rewards. Lido alone controls approximately 28-30% of all staked ETH, creating ongoing decentralization concerns.

Derivatives: dYdX, Synthetix, and Lyra provide on-chain perpetuals, synthetic assets, and options trading.

Layer-2 Networks

Ethereum’s Layer-2 ecosystem is its most important scaling development. Instead of increasing Ethereum L1’s transaction capacity, which would raise node hardware requirements and threaten decentralization, Ethereum delegates execution to L2 networks that inherit its security.

Arbitrum is the largest L2 by TVL and processes millions of daily transactions using optimistic rollup technology. Arbitrum One and Arbitrum Nova serve DeFi and gaming use cases respectively. The Arbitrum Orbit framework lets teams launch custom L2/L3 chains.

Optimism (Base, OP Mainnet): Optimism’s OP Stack powers OP Mainnet and Coinbase’s Base chain. Base became one of the most active L2s in 2025, hosting DeFi, social applications, and AI agents. The Superchain vision is to create interoperable OP Stack chains that share sequencing and security.

zkSync Era: Uses zero-knowledge proof technology to batch thousands of transactions into a single cryptographic proof verified on Ethereum. ZK rollups offer faster finality than optimistic rollups and do not require a 7-day challenge period for withdrawals.

Starknet: A ZK-rollup using StarkWare’s proprietary STARK proof system. It offers high throughput for complex computation and uses an alternative programming language, Cairo, for developers seeking maximum ZK performance.

By Q3 2026, L2 TVL is projected to exceed Ethereum L1 DeFi TVL, reaching an estimated $150 billion versus $130 billion on mainnet, according to DeFiLlama trend analysis. L2’s share of total Ethereum ecosystem TVL is forecast to grow from 27% to 55%.

NFTs and Digital Ownership

Ethereum introduced the ERC-721 standard in 2018, creating the technical framework for non-fungible tokens. The NFT boom of 2020–2022 — including Bored Ape Yacht Club, CryptoPunks, Art Blocks, and thousands of other collections — was built almost entirely on Ethereum. Trading volumes have fallen significantly from their 2022 peak, but Ethereum remains home to high-value digital art, collectibles, and on-chain identity assets.

Enterprise and Institutional Applications

Ethereum’s institutional adoption has accelerated dramatically since The Merge:

• BlackRock’s BUIDL tokenized money market fund runs on Ethereum, as does the majority of the $20B+ tokenized RWA market
• Spot ETH ETFs from BlackRock, Fidelity, and others launched in the US in 2024, providing regulated institutional exposure to ETH
• Coinbase operates its Base L2 on Ethereum and uses Ethereum as the settlement layer for its Smart Wallet infrastructure
• JPMorgan’s Onyx has conducted settlement experiments on Ethereum-compatible infrastructure
• Societe Generale issued the first security token directly on Ethereum mainnet in 2019

Ethereum Developer Ecosystem

Ethereum has the largest developer community in Web3 by a significant margin, according to Electric Capital’s annual Developer Report. More than 8.7 million smart contracts were deployed in Q4 2025 alone, a 45% increase from the previous quarterly peak. Rollups, RWA deployments, and intent-based applications drove the increase.

Core Developer Tools

Solidity is Ethereum’s primary smart contract language. It is statically typed, Turing-complete, and compiles to EVM bytecode. Most deployed Ethereum contracts are written in Solidity. The language has a large global developer base, extensive tooling, auditing services, and community resources.

Vyper is a Python-like alternative to Solidity designed for simplicity and auditability. Some security-focused developers prefer it because of its reduced attack surface.

Hardhat and Foundry are the main development frameworks for testing, compiling, and deploying Ethereum smart contracts. Foundry has gained traction because of its speed and native Solidity testing capabilities.

Remix IDE provides a browser-based Ethereum development environment. Developers can write, test, and deploy smart contracts without local setup. It is suited to learning and rapid prototyping.

OpenZeppelin provides tested and audited smart contract libraries for common standards (ERC-20, ERC-721, ERC-1155) and security patterns. Its contracts are the industry baseline for safe smart contract development.

The Graph — covered separately in this series — indexes Ethereum data for efficient querying. It acts as the “Google” for Ethereum’s on-chain data.

Chainlink provides price feeds, randomness (VRF), automation, and cross-chain messaging for Ethereum smart contracts. See our Chainlink review for a full breakdown of this essential Ethereum infrastructure layer.

Developer Activity by the Numbers

• 8.7 million smart contracts deployed in Q4 2025 (45% surge from previous quarterly peak)
• Optimism ecosystem: 3,044 active developers, 172,000+ GitHub commits
• Arbitrum ecosystem: 2,374 active developers, 189,000+ GitHub commits
• 50+ Layer-2 networks actively building on Ethereum’s infrastructure
• 100+ EVM-compatible chains using Ethereum’s programming environment
• Ethereum’s core protocol itself has thousands of contributors across multiple client teams

Ethereum Staking

Ethereum staking is a core part of the post-Merge ecosystem. It secures the network and distributes ETH rewards to participants.

How Staking Works

Validators stake ETH as collateral to participate in block proposal and attestation. In return, they earn ETH rewards in proportion to their stake. After Pectra, validators can stake up to 2,048 ETH per validator, up from 32 ETH. Rewards now auto-compound within the validator instead of requiring manual re-staking.

Becoming a solo validator requires at least 32 ETH and a validator node that runs continuously. For most users, liquid staking protocols offer a more accessible option.

Liquid Staking

Liquid staking lets users stake any amount of ETH in exchange for a liquid token representing the staked ETH and accumulated rewards:

• Lido Finance (stETH): The largest liquid staking protocol, controlling approximately 28-30% of all staked ETH (~10 million ETH). stETH rebases daily to reflect earned rewards and is widely accepted as collateral in DeFi.
• Rocket Pool (rETH): A more decentralized alternative that requires node operators to stake 8 ETH alongside user deposits, spreading validator responsibility more broadly.
• Coinbase (cbETH): Coinbase’s wrapped staked ETH token, used within the Coinbase ecosystem and by institutional clients. Coinbase controls approximately 3.84 million ETH — 11.42% of all staked Ether — through its staking infrastructure.

P2P.org reported 35,774,027 ETH staked across the network. Approximately 1.2 million ETH was on its own platform, representing $4 billion and reflecting the scale of institutional staking demand.

Staking Risks

• Slashing: Validators that behave maliciously or are taken offline improperly can lose a portion of their staked ETH
• Smart contract risk: Liquid staking protocols add smart contract vulnerability risk on top of base staking
• Lido concentration: Lido’s ~30% share of staked ETH is a widely discussed centralization concern, with potential implications for Ethereum’s censorship resistance if Lido validators were pressured by regulators

Real-World Use Cases

Tokenized Real-World Assets (RWAs)

Ethereum is the primary settlement layer for the growing tokenized RWA market. BlackRock’s BUIDL fund — the largest tokenized money market fund — runs on Ethereum. The tokenized RWA market surpassed $20 billion, with Ethereum hosting most of these assets. Tokenized US Treasuries, real estate, private credit, and commodities are all being deployed on Ethereum, with Ripple and BCG projecting tokenized RWAs growing to $18.9 trillion by 2033.

Decentralized Identity (ENS)

The Ethereum Name Service (ENS) maps human-readable names (e.g., vitalik.eth) to Ethereum addresses, IPFS content hashes, and other data. ENS provides a Web3 identity layer that users own and corporations do not control. More than 3 million .eth names have been registered.

Decentralized Autonomous Organizations (DAOs)

Ethereum smart contracts enable DAOs, organizations governed by token holders through on-chain voting rather than legal structures. Major DAOs, including MakerDAO (governing $8B+ in DAI), Uniswap DAO (governing $6B+ in protocol fees), and Arbitrum DAO, manage billions of dollars in treasury assets through Ethereum smart contracts.

Cross-Border Payments and Stablecoins

USDC and USDT, the two largest stablecoins by market cap, collectively represent $200B+ and are primarily issued and transferred on Ethereum. Ethereum’s programmability and stablecoin liquidity support cross-border payments, DeFi yield strategies, and on-chain corporate treasury management outside the traditional banking system.

On-Chain Gaming and the Metaverse

Ethereum introduced verifiable digital ownership through NFTs and ERC-1155 multi-token standards. Games such as Axie Infinity, Gods Unchained, and Illuvium give players ownership of in-game assets that can be traded, transferred, and retained regardless of whether the developer continues operating. Decentraland and The Sandbox also use Ethereum for land ownership and governance.

Competitors

Solana

Solana is Ethereum’s most significant competitor for developer and user mindshare. It offers higher native transaction throughput, sub-second finality, and very low fees. The trade-offs include a more centralized validator set, periodic network outages, and a shorter security record. Solana leads in meme coin trading, consumer applications, and mobile-native crypto. Ethereum leads in institutional applications, DeFi TVL, and developer tooling maturity.

BNB Chain

Binance’s EVM-compatible chain offers lower fees than Ethereum L1 and high throughput, but its validator set is much more centralized, with 21 validators versus Ethereum’s 1M+. BNB Chain has a large user base, primarily in Asia, and a thriving DeFi and NFT ecosystem. It lacks Ethereum’s institutional adoption and security track record.

Avalanche, Polygon, and Others

Both offer EVM compatibility and higher throughput than Ethereum L1. Avalanche’s subnet architecture and Polygon’s AggLayer aim to create interoperable networks of specialized chains. Both benefit from Ethereum’s developer tooling but compete with Ethereum’s L2 ecosystem for application deployment.

The honest assessment

The EVM is deeply embedded in global blockchain infrastructure and is unlikely to be displaced by another execution environment in the near term. Ethereum’s practical competition is not whether another chain will win. It is whether Ethereum’s L2 ecosystem will grow fast enough that users no longer experience the base layer’s limits. Dencun, Pectra, and Fusaka are Ethereum’s direct responses.

Pros and Cons

Pros

Largest developer ecosystem in Web3. Ethereum has more developers, tooling, auditing firms, educational resources, and composable protocols than any other blockchain. These developer network effects compound over time.

Unmatched security track record. Ethereum L1 has never experienced a successful network-level attack. With more than 1 million validators and 35.7+ million ETH staked, attacking Ethereum would require an astronomical amount of capital and would likely be self-defeating.

Institutional adoption and regulatory clarity. Spot ETH ETFs, $20B+ in tokenized RWAs deployed on Ethereum, and a well-understood regulatory classification make Ethereum the default blockchain for institutions entering Web3.

EVM as the universal standard. The Ethereum Virtual Machine is Web3’s universal programming environment. More than 100 chains are EVM-compatible, so Ethereum developers can deploy across the ecosystem without learning a new language.

Active, transparent development process. Ethereum uses an open upgrade process. EIPs are proposed, debated, tested, and implemented through multiple client teams, with no single point of control. The move to biannual upgrades in 2026 shows greater organizational maturity.

Cons

L1 fees remain high without L2. During periods of high activity, Ethereum mainnet fees can reach $20–$100+ per transaction, making small-value use cases impractical. Users who do not use L2 networks pay a significant premium.

L2 fragmentation. With 50+ L2 networks, Ethereum’s liquidity and user activity are divided. Moving assets between L2s requires bridges, which add complexity, cost, and security risk. The interoperability problem between L2s remains unsolved.

Lido centralization risk. One liquid staking provider controls ~30% of staked ETH. That represents a systemic risk to Ethereum’s censorship resistance, one of the protocol’s most important properties.

Slow upgrade cadence (improving). Ethereum’s consensus-driven development process is thorough but slow. Moving from annual to biannual upgrades helps, but protocol changes still take longer to ship than on more centralized chains.

Competing L2 security models. Not all L2 networks inherit Ethereum’s full security. Some use centralized sequencers, permissioned proof systems, or security councils with override powers. “Built on Ethereum” does not guarantee Ethereum-level security for users.

Verdict: Is Ethereum Still the Foundation of Web3?

Yes, and not by a narrow margin. In 2026, Ethereum remains the foundation of the decentralized web by the measures that matter for long-term infrastructure: developer ecosystem size, institutional adoption, total value secured, smart contract programmability, and upgrade trajectory.

The Merge resolved Ethereum’s ESG objection. Dencun addressed its L2 cost problem. Pectra addressed its UX and staking complexity problems. Fusaka addresses data availability. Glamsterdam and Hegotá will address throughput and privacy. The roadmap is coherent, the development process is transparent, and the community is moving in the same direction despite its internal debates.

Ethereum’s challenges are real: L2 fragmentation, Lido centralization risk, and an upgrade cadence that is faster but still slower than those of more centralized chains. These are not existential problems. They are the known trade-offs of a genuinely decentralized protocol that does not sacrifice its core properties for short-term performance gains.

For developers building financial infrastructure, institutions tokenizing real-world assets, and users who want rules that cannot be changed by one company’s decision, Ethereum remains the only credible foundation.

More on this topic: Web3 Projects and Solana Review: The High-Performance Blockchain Built for Mass Adoption.

See also: Polkadot Review: The Internet of Blockchains Explained.