About Ethereum
Ethereum is a programmable blockchain whose native token is ether (ETH). Ether pays the transaction fees, called gas, that run smart contracts on the network. Ethereum moved from proof-of-work to proof-of-stake in 2022, so ETH is now staked rather than mined.
What the move to proof-of-stake changed
Ethereum’s own documentation says plainly that the 2022 change of consensus was never intended to lower gas fees. It swapped the way blocks are agreed on without expanding how much the network can process, so main-chain speed stayed much the same. What changed was energy use, down an estimated 99.95 per cent, and the rate at which new ether is created.
At the time of the change, ethereum.org put total annual issuance at about 4.61 per cent: about 4.09 per cent paid to miners and about 0.52 per cent to validators. Removing the mining half cut new issuance by about 88.7 per cent. That remaining figure was calculated on 14 million ether staked, and it moves with the amount staked, so it describes September 2022 and not a rate that still holds. A fee rule from 2021 runs alongside it. Every transaction pays a base fee that is destroyed instead of paid to anyone, so when the network is busy enough, more ether is destroyed than created. Supply is not a schedule. It is an outcome of how much the network is used.
Who can change the rules is spread across the software itself. Every node runs two clients together, one for execution and one for consensus, and each layer has several implementations built by different teams in different programming languages. The documentation gives the reason plainly: not depending on any single implementation. Changes are proposed as Ethereum Improvement Proposals, whose authors are responsible for building consensus for them, and core changes go to a developers’ call that reaches a rough consensus on what to implement. Governance happens off the chain.
The limits are the documentation’s own. The main chain cannot easily be made faster, because that would need larger nodes and more specialised hardware, cutting the number of people able to run one. High demand causes congestion, which raises fees and prices out those who cannot pay them. Rollups on separate networks are the primary scaling technique, moving activity off the chain those limits apply to.
Longer read: What the Ethereum merge changed, and what it did not. Ethereum swapped its consensus mechanism in September 2022. It did not make transactions cheaper, and it was never meant to. What it did change was energy use and the rate at which new ether is created.
See more prices on the crypto in AUD hub, and how this figure is struck on the methodology page.