Ethereum (ETH) Explained: Everything You Need to Know Before You Buy
Most people decide on Ethereum by staring at a price chart. This session takes the opposite approach: understand the asset first, then decide what the chart is telling you. Ethereum launched in 2015, holds roughly 53% of all DeFi total value locked, has about a third of its supply staked, and — unlike Bitcoin — has no hard cap on supply. Those four facts explain most of the debate around ETH.
Bitcoin Does One Job. Ethereum Runs Code.
In 2013, Vitalik Buterin published a white paper arguing Bitcoin's design was intentionally limited. Bitcoin moves one asset on a transparent ledger and does it very well. His question was simple: what if that same tamper-resistant ledger could also run programs, not just transactions?
That single design decision is why DeFi, stablecoins, NFTs, rollups and tokenized treasuries exist on Ethereum and not on Bitcoin. It isn't a claim that one is better — they solve two different problems. Bitcoin is a store of value. Ethereum is a settlement layer for financial products built on top of it. If you want the counterpart to this breakdown, start with the five core points behind how Bitcoin actually works and compare the two theses side by side.
Supply, Burns and Staking Yield
New ETH is only created one way: as rewards paid to validators securing the network. ETH is destroyed a second way — the base fee on every transaction is permanently burned. The net of those two numbers decides whether supply grows or shrinks.
The 2022 Merge cut issuance by roughly 90% and dropped energy use by 99.9%. Annual inflation fell from 4–5% to under 1%. For a stretch after 2022, burns outpaced issuance and total supply actually shrank. Today there are roughly 120–122 million ETH in circulation, growing about a quarter of a percent per year.
Around 39 million ETH — close to a third of supply — is committed to validators earning roughly 2.5–3% a year. Native staking involves an entry queue (around 40 days) and an exit queue of a couple of weeks. Liquid staking gives you a receipt token instead, and spot ETFs are the hands-off route. If the mechanics are new to you, this walkthrough of how staking crypto produces network yield covers the trade-offs of each method.
Rollups, TVL vs TVS, and Wall Street
Base, Arbitrum and Optimism are often listed as separate chains, but they're rollups that batch activity and settle back to Ethereum. Think of four friends driving separate cars into a $10 parking lot versus all four sharing one car — same access, one fee, split four ways. There are roughly 73 active rollups. Roll their activity back in and Ethereum's 53% DeFi share looks considerably larger.
One measurement warning: TVL is money at work in applications; TVS includes idle and bridged assets the chain secures. Compare TVL to TVL, never TVL to TVS — the same discipline you'd use when comparing market cap against fully diluted value.
Meanwhile, BlackRock's 2026 outlook puts roughly 65% of tokenized assets on Ethereum. Tokenized treasuries, money market funds and private credit grew from about $5.5 billion in early 2025 to roughly $37 billion, with Ethereum holding most of it. Stablecoins on Ethereum sit around $157 billion.
You Can Be Right About the Network and Wrong About the Token
Record ETF inflows, institutional building and a third of supply locked are all bullish. Yet ETH fell roughly 46% in the first half of 2026. Adoption and price are not the same variable. One chart worth watching is the ETH/BTC pair — the 2021 altcoin run was preceded by ETH outperforming Bitcoin. You can follow how the ETH/BTC ratio signals market leadership rather than guessing from headlines. If you want to chart ETHBTC yourself with alerts and multi-timeframe views, TradingView is the platform used throughout these sessions.
Want to go deeper, ask questions live, and work through the full coin breakdown course alongside other investors? Join the Crypto School community at skool.com/crypto-profit — every new member gets an intro call to map out what they want to learn.
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