Introduction to Ethereum
Introduction to Ethereum
Definition: Ethereum is a decentralized blockchain platform that creates a peer-to-peer network to securely execute and validate smart contracts.
Smart Contracts: Smart contracts allow participants to transact with one another without the need for a trusted centralized authority. Transaction records are immutable, verifiable, and securely distributed across the network.
Transactions and Fees: Transactions are carried out through Ethereum user accounts. The sender must sign the transactions and pay a fee in Ether (ETH, the native cryptocurrency of Ethereum) for processing on the network.
Key Message: Ethereum is a network for creators, providing an environment for developers to build and deploy decentralized applications (dApps). Ethereum is the main platform for thousands of applications and blockchains that all operate on the Ethereum protocol. This dynamic ecosystem enables innovation and offers a diverse range of decentralized applications and services.
Ethereum Accounts:
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Free
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Globally accessible
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Pseudo-private: No need to provide personal information
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No restrictions: Anyone can participate
Ownership and Control: No company owns Ethereum, and no entity makes decisions about its future.
Who Manages Ethereum?
Decentralized Management: Ethereum is not controlled by any specific entity or individual. Ethereum operates whenever computers connect and run software that follows the Ethereum protocol, contributing to the blockchain.
Nodes: Each of these computers is called a "node." Anyone can run a node.
Staking: To participate in securing the network, Ethereum's Ether (ETH) tokens must be staked. Anyone with 32 ETH can participate in the staking process without needing permission.
Source Code and Development: The source code of Ethereum is not produced by a single entity; anyone can propose changes to the protocol. There are multiple independent open-source implementations of the Ethereum protocol, encouraging community participation.
The Merge
Date and Time: On September 15, 2022, at 06:42:42 UTC, the "Merge" event was completed at block number 15537393.
Consensus Algorithm Change: Ethereum transitioned from Proof of Work (PoW) to Proof of Stake (PoS).
Impact: The merging of Ethereum's mainnet with the Beacon Chain, based on PoS, resulted in lower energy consumption and improved sustainability for Ethereum. This is part of Ethereum's ongoing upgrades to enhance scalability, security, and sustainability.
Benefits of Building on Ethereum
High Flexibility: Ethereum provides a flexible platform for building decentralized applications (dApps).
Development Tools: Ethereum uses Solidity (a native programming language) and the Ethereum Virtual Machine (EVM). It offers a rich ecosystem of development tools and best practices alongside protocol maturity.
User Experience (UX): Popular wallets like MetaMask, Argent, and Rainbow provide user-friendly interfaces.
Encouraging Developers: Ethereum's large user community encourages developers to build their applications on the platform.
Support for New Industries: Ethereum serves as the main platform for decentralized applications like Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs).
Use Cases
1. Decentralized Finance (DeFi)
Definition: DeFi is a set of financial applications built on blockchain.
Features:
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Open, programmable, and without centralized authority.
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Allows new models for payments, investments, lending, and trading.
Examples: Popular platforms include Compound, Aave, UniSwap, and MakerDAO.
2. Non-Fungible Tokens (NFTs)
Definition: NFTs (Non-Fungible Tokens) are unique, indivisible digital tokens used to prove the origin of scarce assets, whether digital or physical.
Use Cases: Artists can tokenize their works to prove uniqueness and ownership. In the gaming industry, NFTs allow interoperability and collaboration across different game platforms.
Examples:
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First NFT project on Ethereum: CryptoKitties
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Gods Unchained: A card game that grants players full ownership of in-game items.
Growth and Popularity: As more companies turn to tokenization of assets, the popularity of NFTs is increasing.
What is ERC20?
ERC20 is a standard for fungible tokens on the Ethereum blockchain. It stands for Ethereum Request for Comments 20 and defines a set of rules and functions that Ethereum-based tokens must follow. This ensures interoperability and compatibility with applications, wallets, exchanges, and smart contracts across the Ethereum ecosystem.
Since ERC20 was established as the standard for creating fungible tokens, it has become a key component of the Ethereum blockchain ecosystem, enabling developers to build innovative solutions and driving the platform’s growth.
How Does ERC20 Work?
At its core, the ERC20 standard defines functions that a token contract must implement to be considered ERC20-compliant. These functions are essential for tracking total supply, managing token transfers between addresses, and more.
Main ERC-20 Functions:
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totalSupply: The total supply of ERC-20 tokens. -
balanceOf: The balance of ERC-20 tokens held by a specific address. -
transfer: Allows the transfer of ERC20 tokens from one address to another. -
approve: Grants an address the ability to spend tokens on behalf of another address. -
transferFrom: Allows a pre-approved address to send tokens from one address to another. -
allowance: The amount of tokens an approved address can spend on behalf of another address.
These functions are critical for the operation of ERC20 tokens, ensuring that token transfers are secure and authorized.
Additionally, developers can add optional functions such as:
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name: The name of the ERC-20 token. -
symbol: The token's ticker symbol. -
decimals: The number of decimal places the token can be divided into.
What is ERC721?
ERC721 is a standard for Non-Fungible Tokens (NFTs) on the Ethereum blockchain. Unlike fungible tokens, such as cryptocurrencies, where each token is identical and interchangeable, NFTs are unique and can represent ownership of specific assets or items.
The ERC721 standard defines rules and functions for creating, transferring, and querying ownership details of these unique tokens.
ERC-721 Functions
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BalanceOf: Returns the number of NFTs owned by a specific address. -
OwnerOf: Identifies the owner of a specific token based on its unique identifier. -
SafeTransferFrom: Ensures safe transfer of token ownership from one address to another. -
TransferFrom: Allows token ownership transfer between addresses when the sender is authorized. -
Approve: Approves an address to transfer a specific NFT on behalf of the owner. -
GetApproved: Returns the address approved for transferring a specific NFT. -
SetApprovalForAll: Allows the owner to grant or revoke permission for a third-party operator to manage all their NFTs. -
IsApprovedForAll: Checks if an operator has permission to manage all NFTs for a specific owner. -
SafeTransferFrom with Data: It is similar to the
SafeTransferFromfunction without data but has an additional data parameter. This parameter allows for adding extra information during the transfer of a token, especially when the receiver is a smart contract. It also checks whether the smart contract is capable of receiving the token (through the execution of theonERC721Receivedfunction) to ensure the transfer is smooth.
How does the ERC-721 standard work?
The ERC-721 standard provides a blueprint for developers to include specific functions in their smart contracts. These functions allow for the creation, transfer, and management of Non-Fungible Tokens (NFTs).
Each token created has its unique metadata, which ensures its distinct identity and characteristics. Smart contracts that implement ERC-721 act as a digital ledger, recording ownership details of tokens precisely. This ledger enables secure and transparent exchange of tokens between users while also storing information about the total supply of tokens and how they are distributed across various addresses.
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