In November 2008, a pseudonymous user by the name of Satoshi Nakamoto published a paper on the Cryptography Mailing List, outlining plans for a decentralized digital currency. Almost a year later, Satoshi went on to create the first major cryptocurrency, bitcoin.
The meteoric rise of bitcoin led to the creation of new digital assets and emerging use cases. Inspired by the success of bitcoin, Vitalik Buterin published the Ethereum white paper in 2013. While Satoshi helped create the standard for cryptocurrencies, Vitalik’s Ethereum blockchain created a baseline for what has become the modern crypto economy.
While the Bitcoin blockchain created a peer-to-peer electronic cash system that created a new financial paradigm, Ethereum was designed with a different purpose. What made Ethereum unique was its smart contract functionality. Smart contracts are contracts that can automatically execute transactions if certain conditions are met without any intermediaries. These can facilitate financial transactions, voting, governance, among other things.
Ethereum is an enormously powerful shared global infrastructure that provides the foundation for any developer to build decentralized applications (dapp), which use smart contracts, on its platform.
The launch of Ethereum brought a wide range of use cases to blockchain technology. In turn, Ethereum-based projects have influenced the modern crypto economy. In this article, we’ll take a look at some of the most influential blockchain projects and how their roots in Ethereum led to emerging crypto sectors like decentralized finance (DeFi), non-fungible tokens (NFT) and decentralized autonomous organizations (DAO).
Although it wasn’t the first DeFi project, Uniswap has solidified its place as one of the most influential blockchain projects in decentralized finance. Specifically, Uniswap created the standard practice of implementing autonomous trading mechanisms known as automated market makers (AMM) for decentralized exchanges. Unlike traditional, centralized exchanges, AMMs eliminate the need for intermediary parties for trading by replacing order books with self-executing computer programs.
Before it became the largest decentralized spot exchange in the world, Uniswap started out in 2016 as an idea in a Reddit post written by Vitalik Buterin, which explored the concept of AMMs and the creation of decentralized exchanges (DEX) that didn’t require a traditional order book. After seeing Vitalk’s vision and receiving encouragement from the Ethereum Foundation to learn how to code, Hayden Adams went on to launch Uniswap two years later.
The development of AMMs stands as one of the most transformative milestones in DeFi. Since the launch of Uniswap, the majority of DEXs are either AMM or AMM-based, including Curve, PancakeSwap, Osmosis and many others.
Just three months after the launch of the Ethereum mainnet in 2015, Cyrus Adkisson put his virtual world Etheria on display for Ethereum’s DEVCON 1 conference. In Etheria, players could buy and sell hexagonal plots of land for a price of one ether (ETH). Because land is non-fungible and Adkisson needed a way to verify that the owners had a proper “title,” he represented the land using non-fungible tokens.
Etheria represents an important moment in NFT history because it was the first time an NFT was created on the Ethereum network. Today, many NFTs and NFT marketplaces (OpenSea, Nifty Gateway and Rarible, for example) are based on the Ethereum blockchain. Etheria not only introduced the world to the modern NFT, but it also served as an early model for NFT collectibles, metaverse-based land sales and blockchain-based gaming.
In 2016, some early members of the Ethereum community got together and announced their community-developed project: Genesis DAO. Dubbed “The DAO” by the Ethereum community, the project was the first decentralized autonomous organization on the Ethereum blockchain.
Using smart contracts, DAOs create a corporate structure that’s open, transparent and void of any hierarchical management. The DAO was specifically designed to operate like a venture capital fund for decentralized projects, however DAOs can take on many forms, serve different purposes and bring value to virtually anything.
The DAO helped inspire future DAO-based projects and introduced the idea of decentralized governance through code. Today, the top 10 DAOs hold nearly $2 billion in their treasuries and DAO governance is being used for everything from buying one-of-a-kind Wu Tang Clan albums to managing DEXs like Uniswap that handle over $1 billion in transactions each day.
Though the DAO was incredibly influential, its existence on Ethereum was short-lived. Shortly after its launch, a code issue resulted in the hacker exploiting The DAO for $60 million. As a result, the DAO has also become infamously known for the 3.6 million ether hack that resulted in the split of the blockchain into Ethereum and Ethereum Classic.
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