The architects and consensus evolution of Ethereum

Vitalik Buterin conceived Ethereum in 2013 after drafting a white paper about building decentralized applications. He worked with Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin to develop the platform. These founders met in Zug, Switzerland, after an initial meeting in a Miami house during the North American Bitcoin Conference in January 2014. Di Iorio financed the project and invited Lubin and Morgen Peck to observe the early development. Hoskinson left the project following the Zug meeting to found IOHK. The original five founders included Vitalik Buterin, Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, and Amir Chetrit. Jeffrey Wilcke, Gavin Wood, and Joseph Lubin joined as founders in early 2014. The Ethereum Foundation funded multiple teams to build three separate protocol implementations such as Geth, Pyethereum, and a C++ implementation. They also developed Swarm for decentralized file storage and the now defunct Mist Browser. You already know the basics of how the founders met in Miami to discuss the platform. The Foundation also ran the Olympic prototype, which offered a bug bounty of 25,000 ETH for stress-testing the blockchain. I find the security vulnerability of The DAO during the 2016 exploit absolutely appalling. The Enterprise Ethereum Alliance grew to include over 150 members, such as Cisco Systems, Sberbank, and Scotiabank. In 2024, Paul Brody from EY became the new chairperson, while Karen Scarbrough from Microsoft took the role of executive director. Vanessa Grellet from Arche Capital also joined as a new board member.

Consensus shifts and validator roles

The network transitioned from proof-of-work to proof-of-stake on September 15, 2022. This transition, which the community called "The Merge", comprised the Bellatrix, Paris, and Shapella updates. Validators confirm transactions by locking up ETH as collateral. Honest validators earn ETH rewards, while dishonest actors lose part of their stake. This shift increased energy efficiency by over 99.988% and maintained the network’s security and decentralization. Bitcoin relies on miners who compete to solve complex puzzles, whereas Ethereum uses validators to reach consensus. The transition to proof-of-stake involved the Bellatrix, Paris, and Shapella updates, which collectively allowed the network to move away from the energy-intensive mining process used in previous years. I would skip the idea that this change alone defines the network’s future. The issuance rate depends on how much ETH users stake. As more ETH enters staking, individual rewards decrease. The developers justify a dynamic supply because they want the network to maintain the minimum issuance needed for adequate security through consensus adjustments instead of a reliance on transaction fees.

Transaction fee mechanics

The London upgrade in August 2021 introduced EIP-1559 to mitigate transaction fee volatility. This mechanism burns a portion of the ETH used for transaction fees in each block. Users pay a base fee and a tip or priority fee to have their transactions included in the next block. Higher network activity results in more ETH burned, which creates the potential for deflationary periods. In September 2021, approximately 117.5 million ETH coins existed in circulation. Of these, 72 million entered via the genesis block. Within that amount, 60 million went to the 2014 crowd sale contributors and 12 million went to the development fund. The 2014 crowd sale ran from July to August, where participants bought ether with bitcoin. In 2016, The DAO raised $150 million in a crowd sale before an unknown hacker stole $50 million in June. The Berlin upgrade occurred in April 2021. In March 2021, Visa announced it began settling stablecoin transactions using Ethereum. JP Morgan Chase, UBS, and MasterCard also invested $65 million into ConsenSys, a software development firm that builds Ethereum-related infrastructure. Can the network maintain this level of security without a fixed issuance?