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What Is Ethereum (ETH)? Uses, Staking and Where to Buy

If Bitcoin is digital money, Ethereum is a programmable settlement layer. Here's what ETH actually does and how people use it.

What is Ethereum?

Ethereum is a decentralized computing platform launched in 2015. Beyond sending payments, it can run smart contracts — self-executing programs stored on the blockchain. Its native asset is ETH, the second largest cryptocurrency by market capitalisation.

What is ETH used for?

  • Gas — every transaction and contract execution on Ethereum is paid for in ETH.
  • Staking — ETH holders can help secure the network and earn a yield, either by running a validator or through liquid staking services.
  • Collateral in DeFi — lending, borrowing, and minting stablecoins such as DAI.
  • NFTs and tokens — most tokens (ERC-20) and digital collectibles (ERC-721) live on Ethereum or its Layer 2s.
  • Investment exposure — many investors hold ETH as a bet on the growth of on-chain applications.

Proof of Stake and the supply picture

In 2022 Ethereum moved from mining (proof of work) to proof of stake, cutting its energy use by more than 99%. A portion of every transaction fee is also burned, so during periods of heavy usage ETH's supply can shrink rather than grow.

Layer 2 networks

When Ethereum is busy, fees rise. Layer 2 rollups such as Arbitrum, Optimism and Base process transactions off the main chain and settle back to it, offering far lower fees while inheriting Ethereum's security. Most everyday on-chain activity now happens on these networks.

Where can you buy ETH?

  • Centralised exchanges — Binance, Coinbase, Kraken, Bybit and OKX all list deep ETH/USDT and ETH/USD markets.
  • Decentralised exchanges — Uniswap and similar DEXs let you swap directly from a self-custody wallet.
  • Brokers and ETFs — spot Ethereum ETFs provide regulated exposure without managing a wallet.

Risks

Smart contract bugs, competition from other Layer 1 blockchains, regulatory treatment of staking, and general market volatility are the main risks. ETH can and does fall sharply in bear markets.

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