Ethereum Made Simple: From Smart Contracts to Staking – A Complete and Updated Guide

Discover how Ethereum works in a clear yet technically sound way: smart contracts, dApps, staking, recent upgrades, and why demand for ETH is on the rise. Perfect for beginners and advanced enthusiasts.

GUIDES

The Blockchain In Team

8/13/20252 min read

What is Ethereum?

Ethereum is a programmable blockchain launched in 2015 by Vitalik Buterin. Unlike Bitcoin, which is primarily a digital currency, Ethereum enables the execution of smart contracts and decentralized applications (dApps), effectively acting as the operating system of Web3.

How Ethereum Works

EVM: The Engine Behind Smart Contracts

The Ethereum Virtual Machine (EVM) is the computing environment where smart contracts are executed. Every piece of code deployed on Ethereum runs through the EVM, ensuring security, immutability, and decentralization.

Gas and ETH as Fuel

Every transaction or contract execution requires a fee known as "gas," paid in Ether (ETH), Ethereum’s native currency. Gas prices fluctuate based on network demand.

Smart Contracts and dApps

Smart contracts are self-executing programs that run automatically when certain conditions are met. They power dApps such as Uniswap, OpenSea, and MakerDAO, among many others.

Ethereum 2.0 and the Transition to Proof of Stake (PoS)

From Proof of Work to Proof of Stake

In September 2022, Ethereum underwent a major upgrade known as "The Merge," shifting its consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS). This reduced energy consumption by over 99% and introduced staking capabilities for ETH holders.

How ETH Staking Works

What is Staking?

Staking involves locking up your ETH to run a validator node that helps secure the network and validate transactions. In return, you earn ETH rewards. While 32 ETH is required to run your own validator, you can also participate via staking pools or services with smaller amounts.

What's New with the Pectra Upgrade (expected in 2025)?

The upcoming "Pectra" upgrade will introduce two major changes:

Validator Consolidation: Multiple validators can be merged into a single entity, supporting balances up to 2048 ETH.
Auto-Compounding Staking: New Type 2 accounts will enable automatic reinvestment of staking rewards, boosting yield over time.

These improvements are fueling ETH demand by making staking more efficient and appealing—especially for institutional investors.

Why Ethereum Demand Is Surging

More Efficient Staking: Auto-compounding leads to exponential returns for long-term holders.
Reduced Sell Pressure: Staked ETH is locked and not circulating, lowering market supply.
Institutional Adoption: ETFs and ETH-based financial products are gaining traction.
Expanding Ecosystem: DeFi, NFTs, blockchain gaming, and stablecoins continue to rely on Ethereum infrastructure.

Final Thoughts

Ethereum is more than just a cryptocurrency—it's a dynamic, evolving platform powering the decentralized internet. With staking and upgrades like Pectra, ETH is also emerging as a source of passive income.

At The Blockchain IN, we are committed to helping professionals and businesses navigate this transformative shift. Staying informed, educated, and strategically positioned is key to unlocking the full potential of the tokenized economy. Follow us to stay ahead of the curve.