Architecture and Components of Ethereum

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How Ethereum Blockchain Works!

Ethereum architecture

The Ethereum Foundation envisioned Ethereum as a decentralized computing platform that enables anyone to create, store, and run smart contract-based Decentralized Applications, or DApps.

As the below diagram shows, an Ethereum blockchain network is a decentralized Peer-to-Peer (P2P) network of Ethereum clients, representing network nodes. An Ethereum client refers to any node that can verify the new transaction, execute the smart contract, and process new blocks of the chain. It is a kind of enclave, residing in thousands of computers or devices on the internet, and connected through the Ethereum P2P network. What is enclaved is the Ethereum Virtual Machine or EVM and the runtime environment in the P2P network for smart contract execution. The following diagram shows the P2P network:

Ethereum architecture

Ethereum clients run the EVM and can technically be written in any popular programming language. There are many different implementations of Ethereum clients. Ethereum makes it possible for such a variety of different client implementations since every implementation has to conform to the protocol specification defined in the Ethereum Yellow Paper ( There are many advantages with such a variety of Ethereum client implementations, including the following:

  • It makes the network more resilient against bugs.
  • It prevents the centralization of developer resources.
  •  In general, competitions between teams help to find the best solutions to common and challenging issues.
  • Each client may have a different focus, strength, and weakness in mining, prototyping, DApp development, and more. DApp developers or private Ethereum blockchain operators may choose the ones fitting their own special needs.




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Ethereum clients provide a set of web3 APIs over JSON-RPC for DApps interacting with an Ethereum blockchain. From your web or wallet application, you can use the web3 object provided by the web3.js library to communicate with the Ethereum network. It works with any Ethereum client. Behind the scenes, it connects to a local or remote Ethereum node and makes RPC calls. In some sense, this is like the old client-server model, where DApps are the client, and the entire Ethereum network as a whole, acts as a server. To DApps, the Ethereum network is just like a giant world computer, assembled together with thousands of computing devices throughout the internet. Once you connect to the network, you could connect to any node in the decentralized network, as shown in the following diagram:

Ethereum architecture
Beyond smart contracts and the EVM, an Ethereum client provides all blockchain components to maintain world state and state transitions in the blockchain network, including the following:

  • Managing transaction and state transition with the Ethereum blockchain
  • Maintaining world state and account state
  • Managing P2P communication Block finalization with mining
  • Managing transaction pool
  • Managing cryptoassets, gas, ether, and tokens

We will discuss more details on world state in the next section. For other technical concepts, you can refer to the Ethereum documentation page.  
The design behind Ethereum, based on the whitepaper, is intended to build a simple, efficient and extensible blockchain platform, and have a Turing-complete program language to support more sophisticated and complex computations. It not only has all of the benefits of a blockchain but can serve as the framework for supporting all types of digital assets and value transfers as well.

Ethereum – the world computer

 Ethereum is often dubbed as the world computer in the decentralized world. What does that mean? How does Ethereum fulfill the tall order of the humongous computation needed in the digital world? Let's start with the history of the internet and web and discuss the potentials of Ethereum.

The world of decentralization

The World Wide Web started as the decentralized content network in the early '90s. It is designed for people to publish and share content without going through any central authority or intermediary. But from the early 2000s, with the advent of e-commerce, social and mobile, collectively called Web 2.0, we began to communicate, interact, and transact with each other and share information through centralized services provided by big companies such as Google, Facebook, Microsoft, and Amazon. Thanks to the power of platforms, platform businesses such as Uber, Airbnb, and Facebook managed to disrupt traditional business models and dominate vast traditional industries within just a few years of their own launch and outcompeted the traditional companies with a tiny fraction of the number of employees and resources. The direct consequence of such platform success is all that user data concentrated in the hands of a few, creating risks that our data will be misused or even hacked. It also makes it easier for governments to conduct surveillance and impose censorship.
Blockchain is on the way to become the new internet, Web 3.0. Bitcoin laid a foundation of decentralization with its shared public ledger, a digital cryptocurrency payment model, and P2P technology. Ethereum took this model further beyond finance and P2P payment, which propelled the creation of a new business model called DApp

A DApp is an application or service that runs on a blockchain network and enables direct interaction between consumers and providers, for example, connecting buyers and sellers in a decentralized marketplace. Similar to the centralized application architecture, a DApp usually involves a decentralized backend that runs on the blockchain network and a centralized frontend that allows end users to access their wallets and make a transaction. The below diagram shows the differentiation between centralized and decentralized applications:

Ethereum architecture

Although there are many different viewpoints, it is a common belief that a DApp must be completely decentralized and open source. It must run on a blockchain network and use and generate cryptographic tokens. Most DApps often start with a whitepaper and a working prototype.

Instead, as a DApp, Ethereum provides a platform for anyone to write smart contracts and decentralized applications based on your business needs and value propositions. It is intended as the world computer for the decentralized world. As such, Ethereum provides four decentralized computing facilities, along with a large list of development and testing tools, which make it very easy to develop and deploy DApps on to the Ethereum blockchain. The four decentralized computing facilities are as follows:

  • Ethereum blockchain for decentralized state
  • Smart contracts for decentralized computing
  • Swarm and IPFS for decentralized storage
  • Whispers for P2P messaging

The following diagram shows the decentralized computing facilities

Ethereum architecture

Many types of DApps are being created. According to State of the DApps (, as of February 2019, there are over 2,500 DApps and about 6,000 smart contracts listed, and over 90% of them are running on the Ethereum network.


In this article, we briefly reviewed the architecture and components behind Ethereum. Along the way, we learn about characteristic and architecture of decentralized networks and in what ways they outperform traditional centralized networks.

This article is written in collaboration with Brian Wu.


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