Since 2013, many decentralised applications have been built on Ethereum. The surrounding Ethereum ecosystem has grown to a market cap of over $140 billion. Famous decentralised applications include digital art marketplace Foundation and browsers such as Brave that let you earn cryptocurrency from browsing the internet.
More recently, Ethereum has powered the explosion of the decentralised finance industry, otherwise known as DeFi.
DEFIAn umbrella term for various financial applications in cryptocurrency or blockchain aiming to disrupt and improve upon financial intermediaries.
Innovations include decentralised exchanges and lending platforms amongst many others. The industry is young, moves fast and is continually growing and is an excellent example of the power of Ethereum.
Another interesting example of the power and perhaps the dangers of the Ethereum platform is the DAO. The DAO was a digital Decentralised Autonomous Organisation and a form of investor-directed venture capital fund.
The DAO aimed to be a new venture capital fund that allowed investors to vote via tokens granted based on the amount invested. It is estimated that the fund reached an Ether value of over $150 million.
It lasted around 6 months in 2016 before an attack that saw nearly $50 million worth of Ether stolen. This Ether was eventually returned to its original owners via a ‘hard-fork’. This fork means the original Ethereum blockchain is no longer the main Ethereum chain (known as mainchain) and is now called Ethereum classic.
The DAO highlighted specific vulnerabilities with creating DApps at scale. Namely that the complex codebases needed to develop large DApps such as the DAO can be exploited.
To get the whole story of Ethereum and understand where the platform is heading next, we need to look at these vulnerabilities in more detail and evaluate the platform in light of its limitations.
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