Author: Raserei Source: cointelegraph Translation: Shan Ouba, Jinse Finance
Ethereum’s history began more than a decade ago as a gleam in the eye of its founder, Vitalik Buterin, a lanky math genius who was frustrated by Bitcoin’s limitations and believed he could do better with a blockchain.
Buterin envisions cryptocurrencies moving beyond being just a monetary asset to expanding blockchain technology into a “global computer” — a platform that hosts decentralized applications, driven by smart contracts that require little human intervention or trust assumptions.
Today, Ethereum is the world’s second-largest crypto asset, supporting a multi-trillion dollar ecosystem of dependent networks. It is the blockchain of choice for several of the world’s largest asset managers, hundreds of thousands of daily users (layer 1), and millions of connected layer 2 users (layer 2).
Here are 11 of the most important moments in Ethereum’s history and some of the major upgrades to look forward to.
Ethereum Whitepaper — 2013
Buterin first encountered Bitcoin as a teenager through his father, a Russian-born engineer who immigrated to Canada with his family.
Lacking the funds to invest in Bitcoin mining or the Bitcoin asset itself, Buterin worked as a crypto blogger in the early 2010s and was paid in BTC.
Romanian Bitcoin enthusiast Mihai Alisie noticed his talents as a leading thinker and writer in the field, approached him, and the two founded Bitcoin Magazine in 2012.
A year later, in 2013, Buterin, then only 19 years old, published the Ethereum white paper, outlining a “next-generation smart contract and decentralized application platform.” He told Business Insider that its purpose was simply to fix the problem of Bitcoin’s “too limited functionality”:
Think about the difference between a pocket calculator and a smartphone. The pocket calculator does one thing and does it well, but people actually want to do all these other things. If you have a smartphone, then on your smartphone you have the pocket calculator app. You can play music as an app. You have the web browser as an app, and pretty much everything else.”
Later, he received a $100,000 Peter Thiel Scholarship and began researching the Ethereum platform.
Red Wedding – 2014
Before Ethereum became what it is today, it went through some growing pains and conflicts, with the first major conflict being the infamous “Red Wedding” — where the future of the network was handed into Buterin’s hands.
As Camila Russo documents in her book The Infinite Machine , on June 7, 2014, the team of co-founders gathered in Zug, Switzerland to sign a document turning Ethereum into a for-profit company.
But the contract was never signed, and tensions over Charles Hoskinson’s management style, Amir Chetrit’s contribution to the project, and the future direction of Ethereum reached a boiling point.
The power over which direction Ethereum should go was left to Buterin, who ousted Hoskinson (who later founded Cardano) and Chetrit and established Ethereum as a nonprofit foundation rather than a company.
“We have our differences of opinion, and sometimes those differences get to the point where they become famous…even notorious,” Ethereum co-founder Joe Lubin told The Journal in a 2023 interview.
ICO and Launch – 2014
Ethereum’s next big move was to raise funds and gain widespread public attention during its initial coin offering in 2014, selling millions of dollars worth of ETH to fund the project’s development.
Between July 22 and September 2, 2014, ICO investors snapped up over $18 million worth of ETH, paying with BTC.
The Ethereum blockchain and its native token ETH were officially launched on July 30, 2015.
With a market value of $0.31 per ETH token, this marks an impressive return of 1,057,000% for anyone lucky enough to hold ETH until today’s price of $3,275.
Of course, no one knows for sure, but Ethereum and Consensys co-founder Joe Lubin is rumored to have invested more in ICOs than anyone else.
The DAO Hack and Ethereum Classic — 2016
Arguably the most impactful event in Ethereum’s history was the now-infamous DAO hack, which saw hackers steal more than 3.6 million ETH from the early idealistic decentralized autonomous organization.
The attack sent shockwaves through the market, causing the price of ETH to plummet from $20 to $9 in less than 36 hours.
Due to disagreements on how to deal with the attack, the Ethereum community is divided into two main camps: one camp wants to continue operations as usual; the other camp wants to roll back the network to before the attack to resolve the problem.
It was a philosophical disagreement: Should blockchains be immutable records, with code as law, or can blockchain leaders simply change history to erase inconvenient events? The debate was fierce on both sides, and the debate over whether Ethereum was on the right path continues to this day.
Ultimately, a majority of the Ethereum community voted to hard fork the network in order to roll back the blockchain and regain the assets lost in the vulnerability.
One of the hard forks was a proof-of-stake blockchain that still retains the Ethereum name to this day, while the other hard fork was called Ethereum Classic — technically the original version of the Ethereum blockchain, which is still a proof-of-work blockchain.
CryptoKitties Hacks Ethereum — 2017
One of the weirdest things to happen on Ethereum was the advent of CryptoKitties, a collection of non-fungible tokens, which more or less broke the entire network.
CryptoKitties was launched in October 2017 by Vancouver-based startup studio Axiom Zen as a serious yet playful experiment in blockchain technology, allowing users to collect and cultivate different types of NFTs.
By early December, CryptoKitties had become all the rage, with NFT prices reaching as high as $170,000. Kitties demand and activity was so high that it clogged the Ethereum network, causing fees to soar.
In response to the sudden network outage, an elite team of Ethereum developers from projects like MetaMask and Infura came together to deploy rapid optimizations and work on long-term scaling solutions for the network.
Although crypto enthusiasts remain divided over the quality and value of the CryptoKitties project itself, it is undeniable that it has had a huge impact on the development of the Ethereum network and helped trigger the NFT craze.
Summer of DeFi — 2020
The summer of 2020 — colloquially dubbed “DeFi Summer” by crypto enthusiasts — marked a turning point in crypto history, with Ethereum suddenly becoming a hotbed for entirely new financial activity.
New users flocked to the Ethereum network, all eager to try out the hundreds of new protocols that sprang up on the network. This sparked a boom in digital asset lending and trading across hundreds of protocols, many of which now form the backbone of today’s multi-billion dollar DeFi industry. Much of the activity was driven by “yield farmers” who were rewarded with tokens for their activity. This was either a genius way to kickstart a flywheel, or unsustainable Ponzi economics.
Well-known Ethereum-based DeFi protocols that emerged during the DeFi summer, including Aave and Compound, now have a total locked value of tens of billions of dollars and daily trading volumes of hundreds of millions of dollars.
Food-themed DeFi has also exploded, most notably SushiSwap, which forked Uniswap and performed a “vampire attack” on it to gain liquidity and users. After Chef Nomi cashed out $14 million in SUSHI, he handed control of the DEX to a young upstart investor named Sam Bankman-Fried.
Rollup Roadmap Reorganization — October 2020
According to Ethereum developer Marius van der Wijden, one of the biggest advantages of Ethereum is that its roadmap itself is not very rigid or fixed.
He told the magazine that the community is constantly “debating what to do next and what to prioritize,” which is crucial to keeping Ethereum decentralized and avoiding capture.
That flexibility was on display in October 2020, when Buterin abandoned the long-standing Eth 2.0 roadmap, which had planned to use OG shards to scale ethereum in a monolithic way — something that looked more like 64 ethereum blockchains running in sync together.
But Buterin abandoned this form of sharding (later implemented by projects like Near) as alternative solutions began to emerge in the form of optimism and ZK-rollups, layer 2 projects that separated execution and computation from the main chain but still inherited its security.
He released a new “rollup-centric roadmap” as research and development showed this would be a viable path to scaling.
The new Rollup roadmap ensures that the Ethereum network will be the best base layer blockchain, with most of the expansion and experimentation taking place through layer 2 networks such as Polygon, Optimism, and Arbitrum. Optimistic Rollup is seen as a faster solution to implement, while ZK Rollup is seen as a possible final solution.
“Today, they’re leveraging a lot of technical discoveries that we have now that didn’t exist 10 years ago. So, for example, data availability sampling… didn’t exist before 2017 — 2017 is when I published my first work on it. Optimistic and ZK-rollups didn’t actually exist before about 2019,” Buterin said at the ETH Seoul 2022 press conference.
Proof of Stake, Mergers — September 2022
Van der Wijden said he believes the merger is the “most critical” moment in the history of the Ethereum network.
The merger was completed on September 15, 2022, marking the transition from the energy-intensive Proof-of-Work consensus mechanism to the more environmentally friendly Proof-of-Stake mechanism.
“This was a huge effort of many people working together for a common goal – and I’m glad we did it. After learning some of the figures about electricity, CO2 consumption and e-waste, I’m proud to be part of this effort.”
The merger reduced Ethereum’s energy consumption by 99% and brought about a major shift in the network’s token economics.
Dencun Upgrade: Blobs and Sharding — March 2024
The next key step for Ethereum occurs on March 13, 2024, when the Dencun upgrade is implemented on the network.
The Dencun upgrade introduced a set of nine different Ethereum Improvement Proposals (EIPs), the most notable of which is EIP-4844.
EIP-4844 introduces proto-danksharding, which significantly reduces the fees paid for block data on the Ethereum Layer 2 network by leveraging “blobs”, a mechanism that allows separate and temporary storage of transaction data.
Dencun found that the cost of executing transactions on Ethereum layer 2 networks such as Arbitrum and Optimism has dropped significantly; however, a side effect is that the total amount of ETH fees burned on the mainnet has also dropped significantly.
eOracle contributor Matan Si told the magazine that the most important developments on Ethereum since the merger have been the expansion of rollups and layer 2 solutions.
What excites me most about the future of Ethereum is its potential to bridge the gap between these execution layers and the real world. Connecting on-chain activity with off-chain data and computation will unlock countless new use cases.”
BlackRock chooses Ethereum – March 2024
One of Ethereum’s biggest institutional milestones occurred on March 20, when asset management giant BlackRock launched its tokenized fund on the Ethereum network.
The money market fund, called the BlackRock USD Institutional Digital Liquidity Fund, or BUIDL, is fully backed by cash and U.S. Treasuries and provides investors with a yield that is paid daily to token holders.
The move was widely seen as a strong endorsement of the reliability and credibility of the Ethereum network by the world’s largest asset manager.
According to rwa.xyz, the BUIDL fund currently has a market cap of $517 million, with over $116 million in trading volume in the last month.
BlackRock CEO Larry Fink said that while he was initially a “naysayer” of crypto assets, he has changed his mind and sees cryptocurrencies, especially Ethereum and Bitcoin, as an emerging asset class.
“I’ve been a big believer in ETH for the last two years,” Fink told CNBC on Jan. 12.
Spot ETF launch – July 2024
The nine spot Ethereum ETFs were first approved by the U.S. Securities and Exchange Commission (SEC) on May 23 and officially launched on July 23.
The launch of the spot fund marks an important step for ETH to become an institutional-grade asset.
Like the Bitcoin ETF, the Grayscale offering suffered a slump as investors sold their holdings in the fund, with the converted Grayscale Ethereum Trust (ETHE) charging 10 times more in fees than other ETFs.
As of press time, the funds have seen net outflows of $390 million; however, ETHE’s flows are slowing, and ETF Store President Nate Geraci said BlackRock ETHA’s three weeks of inflows already make it the sixth most successful ETF launched this year.
Next up: Pectra, Verge, and Splurge
The next big step on the roadmap is the Pectra upgrade, which van der Wijden said will include “a series of upgrades” to the ethereum virtual machine, enabling new use cases such as trustless stake pools and making life easier for developers.
After Pectra, Vitalik launched Verkle, or Verge.
“With Verkle, we changed the way we store state — all the accounts, balances, contracts — to make it easier to prove that your balance was x at block y,” van der Wijden said.
Van der Wijden describes the “purge” as a series of new upgrades designed to get rid of old features that are no longer useful to the network.
“When Ethereum started, they made a lot of assumptions about how things would work, and a lot of them turned out to be correct, but some didn’t turn out the way they expected,” van der Wijden explained.
The latest version of the Ethereum roadmap. (Vitalik Buterin/X)
“So we’ll slowly be cleaning up some of the paths not taken, like disabling Selfdestruct (which was done with the last upgrade) or getting rid of bloom filters in receipts in the future (which will make syncing nodes faster),” he added.
Splurge is also self-explanatory, at least at a top-line level, containing new features that the Ethereum community is willing to “splurge” on.
“They include some of the changes already mentioned to make ethereum easier to use. If we feel there is enough room (in terms of complexity) for the upcoming hard fork, these changes may be released together with other upgrades,” van der Wijden said.
