Ethereum: The Web3 Workhorse
Here’s a deep dive on Web3 and how it relates to the Ethereum blockchain / network. If you prefer a more technical dive (with code, protocols, etc.), I can provide that too.
Let’s break down its architecture, what makes it tick, and how it supports Web3.
Here’s a deep dive on Web3 and how it relates to the Ethereum blockchain / network. If you prefer a more technical dive (with code, protocols, etc.), I can provide that too.
What is Web3?
Web3 (sometimes spelled “web 3.0”) refers to a vision for a new iteration of the the Internet, one that is more decentralized, permissionless, and user-controlled, largely built around blockchain and token-based protocols. Wikipedia+2ethereum.org+2Key Principles & Goals of Web3
- Decentralization
Instead of data, identity, and logic being controlled by centralized servers (owned by large corporations), Web3 aims to distribute trust among peers using blockchains or decentralized networks. McKinsey & Company+2ScienceDirect+2 - User Ownership / Sovereign Identity
Users should own their data, digital assets, and identity, rather than being dependent on platforms (e.g. “login with Google/Facebook”). ethereum.org+2McKinsey & Company+2 - Native Digital Assets & Token Economies
Web3 introduces tokens (fungible and non-fungible) directly into protocols, so users can earn, trade, and leverage digital value (e.g. via DeFi, NFTs, etc.). ScienceDirect+2ethereum.org+2 - Open Protocols & Permissionless Innovation
Anyone can build, connect, or compose new systems without asking permission. Protocols themselves are open and interoperable. ethereum.org+2ScienceDirect+2 - Composability (“Money Legos”)
Because many Web3 components (smart contracts, protocols) are open and interoperable, they can be combined or composed to build new use cases. ScienceDirect+1 - Transparency & Auditability
Blockchains are public, so actions, transactions, state changes are visible (or can be verified) by anyone. This fosters trust and accountability. ScienceDirect+2ethereum.org+2
Ethereum: The Web3 Workhorse
Ethereum is one of the leading blockchains powering Web3 applications. It offers infrastructure, tools, and a large ecosystem for developers to build decentralized applications (dApps). ethereum.org+2ethereum.org+2Let’s break down its architecture, what makes it tick, and how it supports Web3.
Ethereum Basics
| Component | Description |
|---|---|
| Blockchain & Ledger | Ethereum maintains a global state (accounts, code, balances) via blocks of transactions. Wikipedia+2ethereum.org+2 |
| Ethereum Virtual Machine (EVM) | The runtime environment that executes smart contract bytecode. Contracts are compiled to EVM bytecode. Wikipedia+2ethereum.org+2 |
| Accounts | Two types: externally owned accounts (EOAs, controlled by private keys) and contract accounts (smart contracts) Wikipedia |
| Native Token (ETH / Ether) | The native currency used for gas (transaction fees), staking, and protocol incentives. Wikipedia+1 |
| Transactions & Gas | To execute operations or invoke smart contracts, users pay “gas” (in ETH) to compensate network validators. Wikipedia+2ethereum.org+2 |
Key Milestones & Upgrades
- Launch (2015): Ethereum went live in July 2015. Wikipedia
- The DAO & Hard Fork: In 2016, a vulnerability in a smart contract “The DAO” was exploited, which led to a controversial hard fork that created Ethereum (main) and Ethereum Classic. Wikipedia+1
- “The Merge” (2022): Ethereum switched from Proof-of-Work (PoW) to Proof-of-Stake (PoS), drastically reducing energy consumption and introducing staking/validators. Wikipedia+2ethereum.org+2
- Shanghai & Withdrawals: In March 2023, the Shanghai upgrade enabled withdrawal of staked ETH (previously locked). Investopedia
- Scalability Upgrades (e.g. Proto-Danksharding / Rollups): To scale throughput and reduce costs, Ethereum is evolving with rollup-centric designs and sharding proposals (EIP-4844, blobs, etc.). ethereum.org+2The MSA Group+2
Ethereum & Web3 Ecosystem
Ethereum acts as the “world computer” for Web3:- Smart Contracts & dApps
Developers build decentralized apps (DeFi, NFTs, gaming, DAOs, marketplaces) by writing smart contracts (e.g. in Solidity or Vyper). ethereum.org+2ethereum.org+2 - Tokens, Standards & Interoperability
- ERC-20: Standard for fungible tokens
- ERC-721 / ERC-1155: Standards for non-fungible tokens (NFTs)
These standards make tokens interoperable across wallets, exchanges, and dApps. Wikipedia+1
- Layer-2 Scaling & Rollups
Due to base layer limitations, many applications use Layer-2 protocols (Optimistic rollups, zk-rollups) to batch transactions off-chain and submit proofs on-chain. This helps with scalability and cost reductions. ethereum.org+1 - Infrastructure & Tooling
The ecosystem includes node clients, wallets (e.g. Metamask), RPC providers (e.g. Infura, Alchemy), development tools (Remix, Hardhat), blockchain explorers, etc. remix-project.org+2ethereum.org+2 - Governance & Protocol Evolution
Ethereum evolves through Ethereum Improvement Proposals (EIPs), community/governance coordination, and consensus upgrades. ethereum.org+1
Challenges & Critiques
While Ethereum and Web3 offer many promises, they also face serious challenges:- Scalability & Throughput Limits
The base layer cannot support huge transaction volumes compared to traditional systems (e.g. Visa). That’s why L2s, sharding, rollups are essential. Wikipedia+2ethereum.org+2 - Cost / Gas Fees
During network congestion, gas fees can spike, making small-value interactions expensive. Wikipedia+2ethereum.org+2 - Centralization Risks in Practice
Although blockchains are conceptually decentralized, in practice there may be centralization pressures (e.g. dependency on infrastructure providers, node operators, large token holders). Wikipedia+1 - Security: Smart Contract Bugs, Exploits
Bugs or exploits in smart contracts, bridges, or protocol components have led to large losses. ScienceDirect+2ethereum.org+2 - User Experience / UX Hurdles
Web3 interactions (e.g. wallet management, gas estimation, error handling) are often more complex for end users compared to Web2. ethereum.org+1 - Regulatory & Compliance Uncertainty
Legal clarity around tokens, securities, money transmission, and identity is still evolving. - Energy / Sustainability (less of a concern now post-Merge)
Before “The Merge”, Ethereum’s PoW consumed a lot of energy—this concern is significantly reduced under PoS. Wikipedia+1
How Web3 + Ethereum Fit Together in Practice
Here’s a simplified flow of how Web3 applications run on Ethereum:- User Interaction
A user uses a Web3 frontend (web or mobile), which connects to a wallet (e.g. MetaMask) that holds the user’s private keys. - Transaction / Contract Call
The user initiates an action (e.g. send token, mint NFT, vote in DAO), which is packaged as a transaction or contract call. - Signing & Submission
The wallet signs the transaction and sends it to an Ethereum node / RPC endpoint. - Transaction Execution / Validation
The transaction is included in a block by validators (in PoS). Smart contract logic executes, state is updated, fees are paid, events emitted. - State & Events
The new state (balances, storage) and emitted events are recorded on-chain and are publicly visible. The frontend can listen to these events to update the UI. - Composability & Interaction
The contract may call other contracts, read / write token balances, interoperate with other protocols (e.g. into DeFi, oracles, cross-chain bridges). - Layer-2 / Rollups (if used)
If the app uses a Layer-2 network, many steps (especially batching, proof generation) happen off-chain, but final proofs or commitments are anchored on Ethereum. This reduces gas cost and increases throughput.
Summary
- Web3 is about rearchitecting the Web to be decentralized, user-owned, and composable, using blockchain as the trust layer.
- Ethereum is one of the primary platforms enabling Web3, providing smart contracts, token standards, developer tooling, and a large ecosystem.
- There’s a lot of excitement in Web3, but significant technical, usability, and regulatory challenges remain.