Ethereum Technical Deep Dive: Accounts, Smart Contracts, and PoS Consensus

This educational resource details Ethereum, a decentralized blockchain platform launched in 2015, focusing on its key features, accounts, smart contracts, transactions, and consensus mechanisms.

Ethereum Fundamentals

Ethereum is a blockchain platform that supports smart contracts—immutable computer programs executed on the Ethereum Virtual Machine (EVM). It uses Ether (ETH) as its native cryptocurrency to pay for transaction processing and smart contract execution.

Ethereum Accounts and Wallets

Account Types

• Externally-Owned Accounts (EOAs): Controlled by private keys, used primarily for transactions like ETH transfers. Public keys are derived using Elliptic Curve Cryptography (ECC).
• Contract Accounts: Controlled by smart contract code, deployed with a cost, and activated by transactions.

Both account types can hold and transfer ETH and tokens.

Managing Accounts with Wallets

Wallets are tools (not accounts themselves) used for managing Ethereum accounts. They allow users to view balances, send transactions, and interact with decentralized applications (dApps). Users can switch wallet providers and manage multiple accounts easily.

Smart Contracts, Ether, and Gas

Smart Contract Functionality

Smart contracts are deterministic programs running on the EVM, enabling trustless transactions without intermediaries. They are immutable, distributed, and ensure non-repudiation through cryptographically signed transactions. Execution incurs gas fees paid in ETH.

Ether (ETH) and Gas Mechanics

• Ether (ETH): The native cryptocurrency used for transaction fees, smart contract execution, and validator rewards.
• Gas: A unit measuring computational effort. Gas is priced in ETH (determined by gas price and limit), protecting the network from abuse and stabilizing transaction costs.

Transactions and Blockchain Structure

Transaction Components

Transactions include:

• A nonce (for ordering and replay protection).
• Gas price/limit.
• Recipient address, value, and data payload.

Transactions are signed using ECDSA. They can transfer ETH or trigger smart contract functions. Note: Sending ETH to an invalid recipient address may result in the ETH being permanently "burned."

Blockchain Architecture

Transactions are recorded on the Ethereum blockchain, collected into blocks by validators.

Block Composition

• Header: Contains metadata like the parent hash, state root, and gas used.
• Body: Contains transactions and uncle/ommer block headers (relevant primarily during the Proof-of-Work era).

Ommer blocks, created simultaneously with main blocks, were included to reward miners under the legacy Proof-of-Work (PoW) system.

Consensus Mechanisms: PoW to PoS

Historical Proof-of-Work (PoW, Pre-2022)

Miners solved computational puzzles (Ethash) to validate blocks, earning 2 ETH per block and 1.75 ETH for ommer blocks.

Current Proof-of-Stake (PoS, Post-2022)

Validators stake 32 ETH to propose and vote on blocks using the Gasper protocol (Casper FFG + LMD GHOST). Validators earn rewards for timely actions but face penalties or slashing for misconduct.

Proof-of-Stake (PoS) Operations

Validator Roles and Requirements

Validators deposit 32 ETH to participate, running execution, consensus, and validator clients. They propose blocks and attest to their validity.

Slots, Epochs, and Block Proposal

Time is divided into:

• Slots: 12-second intervals.
• Epochs: 6.4-minute periods (32 slots).

A validator is randomly selected per slot to propose a block using the RANDAO mechanism.

Attestations and Finality

Validators vote on blocks (source, target, head) in committees, ensuring consensus. A block is justified with two-thirds validator votes and finalized when a subsequent block is justified.

Transactions achieve finality (irreversibility) after approximately 12.8 minutes (two epochs), requiring a supermajority of staked ETH to agree on checkpoints.

Rewards, Penalties, and Network Security

Validator Rewards and Penalties

Validators earn rewards for timely votes and block proposals, proportional to their stake. Rewards include transaction fees and attestation bonuses.

Penalties apply for late or false attestations. Slashings occur for intentional violations (e.g., proposing conflicting blocks).

The Inactivity Leak activates if finality fails for over four epochs, penalizing non-majority validators to restore consensus.

Sync Committee Role

A group of 512 validators signs block headers for light clients, ensuring data validity over 27-hour periods.

Handling Forks

Forks occur if validators propose conflicting blocks. The fork-choice algorithm selects the chain with the most attestations (the "heaviest subtree").

This summary captures Ethereum’s technical framework, emphasizing its account model, smart contract functionality, transaction processing, and transition to Proof-of-Stake for secure and scalable consensus.