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Ethereum is a blockchain platform designed to build decentralized applications (dApps) using smart contracts. Ether (ETH), its native cryptocurrency, is the second largest crypto by market cap. It’s used to pay for transaction fees (gas), run dApps, and execute smart contracts. Ether also plays a key role in decentralized finance (DeFi), staking, NFTs, and decentralized exchanges.
ETH holders can earn interest by participating in DeFi platforms or staking on Ethereum 2.0. DeFi protocols like Aave and Compound allow users to lend ETH for interest, while staking in Ethereum 2.0 provides rewards for securing the network.
Wrapped tokens are assets that represent other cryptocurrencies on Ethereum’s blockchain, allowing them to be used within the Ethereum ecosystem. Wrapped Bitcoin (WBTC), for example, allows BTC holders to access Ethereum’s DeFi services.
A token swap is a direct trade between two ERC-20 tokens without needing to convert to ETH. Token swaps occur on decentralized exchanges like Uniswap, allowing users to trade different assets seamlessly.
Ethereum’s original PoW model consumed a large amount of electricity due to mining. With the shift to PoS in Ethereum 2.0, the energy required to validate transactions will drop by over 99%, reducing its environmental impact significantly.
Ethereum’s DeFi ecosystem comprises various protocols and dApps that facilitate decentralized financial services like lending, borrowing, and trading. Users interact with these services without intermediaries, with smart contracts handling transactions.