> For the complete documentation index, see [llms.txt](https://canopy-network.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://canopy-network.gitbook.io/docs/canopy-network/why-canopy/comparables/ethereum.md).

# Ethereum

### What is Ethereum?

4 years after the invention of Bitcoin, Vitalik Buterin introduced the world to Ethereum which evolved blockchain to support multi-functional digital accounts capable of executing 'code' and storing 'state'. This innovation introduced the idea of blockchain applications (dApps), *making **blockchain technology more accessible to developers** by abstracting away challenges involved with launching a L1.*

{% hint style="info" %}
Need a refresher on the challenges involved with starting an L1? Checkout [Blockchains Are Hard To Launch](/docs/canopy-network/why-canopy/background-and-industry-state.md#are-hard-to-build)
{% endhint %}

### How does it work?

Builders deploy app code to 'contract' accounts that the Ethereum Validators store,  update state, execute transactions on, and verify. The app code is only the 'state-machine' logic, whereas the Ethereum client handles consensus, peer-to-peer, and persistence.

### Pros & Cons of Ethereum dApps & L2s

**The good:**

* Ethereum is the first security root. Introducing Dependent Apps that are:
  * ✅ quick to market
  * ✅ have immediate security
  * ✅ have access to Ethereum's ecosystem and tooling
  * ✅ have an easy framework to build

{% hint style="warning" %}
It's important not to overlook the features that make Ethereum so popular
{% endhint %}

**The bad:**

* Ethereum is a Monolith where Dependent Apps:
  * ❌ **compete for limited resources**, favoring the highest bidder
  * ❌ **leak economics** to Ethereum for life (fees, network effects, ecosystem lock-in)
  * ❌ **can't leave** without starting over
  * ❌ have **limited scalability**
  * ❌ are **success-capped** with historically lower FDV than L1s
  * ❌ **can't natively communicate with external ecosystems**
  * are **not decentralized,** relying on the host for:
    * ❌ governance
    * ❌ transaction execution 
    * ❌ state updates
    * ❌ blockchain storage
  * Which means:
    * ❌ can be [censored](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1112.pdf?sc_lang=en) by non-stakeholders
    * ❌ are controlled by the host
    * ❌ lack autonomy
    * ❌ have single points of failure

{% hint style="danger" %}
A "not so" decentralized app is just Web2 with an inefficient and complicated architecture
{% endhint %}

### Ethereum & Canopy Comparison

<table><thead><tr><th width="252.7623291015625">_</th><th>CANOPY</th><th>ETHEREUM</th></tr></thead><tbody><tr><td><strong>Architecture</strong></td><td>✅ Peer-to-Peer</td><td>❌ Monolith</td></tr><tr><td><strong>Scaling Method</strong></td><td>✅ Every new chain horizontally scales Web3</td><td>❌ Semi-centralized layers</td></tr><tr><td><strong>Builder Sovereignty</strong></td><td>✅ Progressive</td><td>❌ Critical, lifelong reliance on host for security, finality, execution, and blockchain storage</td></tr><tr><td><strong>Ecosystem</strong></td><td> ❌ New</td><td>✅ The best</td></tr><tr><td><strong>Long range attack</strong></td><td>✅ Proof of Age</td><td>➖ Centralized checkpointing</td></tr><tr><td><strong>Builder Difficulty</strong></td><td>✅ Quick to market</td><td>✅ Quick to market</td></tr><tr><td><strong>Builder</strong> <strong>Economic Security</strong></td><td>✅ Immediate</td><td>✅ Immediate</td></tr><tr><td><strong>Builder Framework</strong></td><td>➖ Fork &#x26; Clone: Golang</td><td>➖ Standards with DSL (Solidity)</td></tr><tr><td><strong>Chain Resources</strong></td><td>✅ Exponential: Each new chain is additive</td><td>❌ Limited: single chain</td></tr><tr><td><strong>Builder Success</strong></td><td>✅ L0 Premium</td><td>❌ Typically lower FDV than sovereign L1s</td></tr><tr><td><strong>Native Interoperability</strong></td><td>✅ Permissionless</td><td>➖Within Ecosystem</td></tr><tr><td><strong>Builder Decentralization</strong></td><td>✅ Full/Progressive</td><td>❌ Not decentralized</td></tr></tbody></table>