Ethereum Technical Reference - AI Optimized

Configuration

Ethereum Node Requirements

Minimum Production Requirements:

• 4+ CPU cores (expect 100% usage during sync)
• 32GB RAM (16GB works until it doesn't)
• 2TB SSD storage (grows 1GB daily)
• Fast internet connection
• Backup power supply (downtime = lost money)

Critical Warnings:

• Initial sync takes 24-48 hours
• Blockchain currently ~2.2TB and growing 1GB daily
• SSD fills faster than expected
• Memory corruption errors cause slashing penalties

Validator Configuration

Staking Requirements:

• 32 ETH minimum stake (~$80K-120K at 2025 prices)
• 99.9% uptime requirement
• Redundant infrastructure costing $1000s monthly
• Complex key management: withdrawal keys, signing keys, validator keys

Failure Modes:

• Single memory corruption = stake slashing
• Brief internet outage = penalties
• Missed attestation = financial loss
• Validator software bugs = automatic slashing

Resource Requirements

Development Costs

Gas Fee Economics:

• Simple transactions: $5-50 during normal periods
• Complex operations: $30+ during peak times
• Failed transactions still cost money
• Token approvals require separate gas payment

Real Development Expenses:

• Hello world contract deployment: $50-200
• Testing deployments: costs more than first car
• Smart contract audits: $50K-200K for thorough review
• MEV protection: ongoing value extraction by bots

Network Performance

Transaction Throughput:

• Ethereum: 15 TPS maximum
• Visa comparison: 65,000 TPS
• Layer 2 solutions: 1,000+ TPS with trade-offs

Gas Price Volatility:

• $5 function call can become $87 same day
• NFT drops cause 10x-100x fee spikes
• Network congestion unpredictable
• Fee estimation accuracy: ~50%

Critical Warnings

Smart Contract Security

Common Attack Vectors:

• Reentrancy attacks (most dangerous)
• Integer overflow in Solidity <0.8.0
• Gas limit manipulation
• Front-running by MEV bots
• Oracle manipulation
• Flash loan exploits

Development Gotchas:

// This code can drain millions
function withdraw() public {
    msg.sender.call{value: balances[msg.sender]}("");
    balances[msg.sender] = 0; // Too late
}

Operational Failures

State Bloat Issues:

• Every transaction stored forever
• State size: ~100GB and growing
• Light clients don't work reliably
• Full nodes need expensive hardware

User Experience Problems:

• One wrong address = funds gone forever
• Wallet setup intimidates normal users
• Gas fee estimation is unreliable
• Browser extensions steal credentials

Decision Criteria

When to Use Ethereum

Suitable For:

• Financial infrastructure needing censorship resistance
• High-value transactions where fees are acceptable
• DeFi protocols with sufficient volume
• Stablecoin operations (USDC, DAI work reliably)

Not Suitable For:

• Micropayments or frequent small transactions
• Consumer applications needing low latency
• Use cases requiring immediate finality
• Applications needing predictable costs

Layer 2 Evaluation

Arbitrum/Optimism Trade-offs:

• 90%+ cost reduction vs mainnet
• Faster confirmation (seconds vs minutes)
• Additional centralization risks
• Complex bridge mechanisms occasionally hacked for $100M+
• Smaller validator sets

Security Inheritance:

• Layer 2s derive security from Ethereum mainnet
• Withdrawal delays: 7 days for optimistic rollups
• Additional trust assumptions required

Implementation Reality

DeFi Protocol Risks

Lending Protocol Economics:

• Deposit crypto: earn 2% APY
• Borrow against it: pay 5% APR
• Gas fees exceed earnings
• Liquidation at 10% price movement
• Require 150% overcollateralization

DEX Trading Costs:

• Gas fees: $5-50 to Ethereum
• Trading fees: 0.3% to liquidity providers
• MEV bot extraction: variable
• Price slippage: depends on liquidity

Development Framework Assessment

Hardhat: Recommended

• Only framework with working debugging
• Extensive plugin ecosystem
• Industry standard for serious development

OpenZeppelin: Essential

• Pre-audited smart contracts
• Reduces security vulnerabilities
• Standard library for Solidity

Alternative Platforms Comparison:

• Solana: Cheaper but frequent downtime
• BSC: Centralized but functional
• Cardano: Decentralized but limited ecosystem
• Avalanche: Balanced approach with fewer developers

Breaking Points

Network Limitations

Scalability Ceiling:

• 15 TPS absolute maximum
• $50 transaction fees during congestion
• UI breaks at 1000+ transaction spans
• Debugging large distributed transactions impossible

Economic Sustainability

Fee Structure Problems:

• EIP-1559 made fees more complex, not cheaper
• Base fees burn ETH (deflationary mechanism)
• Priority fees add complexity
• Estimation still wrong 50% of time

Validator Economics:

• 32 ETH lockup for staking (~$100K investment)
• Professional infrastructure costs $1000s monthly
• Slashing risk from technical failures
• Withdrawal queues during high unstaking periods

Real-World Constraints

Enterprise Adoption Issues:

• Most blockchain initiatives remain pilot projects
• Databases solve most "blockchain" problems cheaper
• Regulatory uncertainty in most jurisdictions
• Tax reporting complexity deters mainstream use

User Adoption Barriers:

• Private key management too complex for average users
• Irreversible transactions create permanent loss risk
• MEV bots extract value from every transaction
• Browser extension security vulnerabilities

Success Metrics

Working Use Cases

Proven Applications:

1. Stablecoins (USDC, DAI maintain pegs reliably)
2. Cross-border payments (expensive but functional)
3. Censorship-resistant value storage
4. Token speculation (highest volume use case)

Failing Applications:

• Gaming tokens (economies collapsed)
• Supply chain tracking (garbage in, immutable garbage out)
• Most government pilots (never scale beyond proof-of-concept)
• Enterprise blockchain (mostly marketing)

Network Health Indicators

DeFi TVL: $25 billion (significant but volatile)
Daily Gas Usage: Indicates real economic activity
Validator Count: Measures decentralization
Layer 2 Adoption: Shows mainnet scaling necessity

This reference prioritizes operational intelligence over promotional content, providing decision-makers with realistic assessments of capabilities, costs, and failure modes for implementing Ethereum-based solutions.