Skip to article
Degrees of SatoshiFollow the connections.
SearchTrace an address
Degrees of Satoshi/ Encyclopedia

Encyclopedia Ethereum · Entry 02

Ether and Ethereum: the asset, the network and the units

AI-assisted research · separate automated verificationCorrections

Theme
Ethereum
Sources
8 cited records
Reading time
About 3 minutes
Automated verification
Substantive update
In this article

At a glance

Key facts

Key facts for Ether and Ethereum: the asset, the network and the units
FactDetailSource
Smallest unitOne wei equals 10^-18 ETH[1]
Fee quotationOne gwei equals 10^-9 ETH[2]
Token distinctionAn ERC-20 balance is contract state, separate from native ETH[4][5]
01

ETH is built into the protocol’s accounts and fees

An Ethereum account has a native ETH balance. Sending ETH changes that balance under the protocol rules. A different token usually maintains balances inside its own contract, using the network to execute those changes.

This distinction explains a common surprise: someone can have a positive token balance but insufficient ETH for an ordinary transaction. Having the thing being transferred does not necessarily pay for the computation that transfers it.

02

Example: convert a fee without a market-price assumption

Suppose an illustrative operation uses 50,000 gas at an effective price of 4 gwei per gas. Its execution fee is 200,000 gwei, which is 0.0002 ETH. These are example inputs, not a current network quote.

The conversion is exact because the units are fixed. A dollar estimate is different: it requires an ETH exchange rate and a timestamp. Changing the dollar price does not change the number of wei already charged.

03

A sponsored transaction still has a payer

Account-abstraction systems can let a paymaster cover network gas. A service might charge the user in a token, subsidize onboarding or apply its own conditions. Ethereum’s underlying gas settlement remains in ETH.

A screen that says no ETH required describes a user-facing arrangement. It does not mean the network has stopped charging or that every wallet supports the same sponsorship terms.

04

Units, supply and value answer different questions

Ethereum issues ETH through consensus rewards and removes ETH through mechanisms including base-fee burning. The balance between issuance and burning can vary; a burn mechanism alone does not establish permanent supply decline.

Neither the denomination nor a supply calculation establishes a fair market price. This entry explains the asset’s protocol role and unit arithmetic, not a forecast or a reason to acquire it.

Direct answers

Questions people ask

Is gwei a separate cryptocurrency?

No. Gwei is a unit of ether, like a smaller denomination of the same asset. One billion gwei is exactly one ETH.

Does every Ethereum token pay its own network fee?

No. Token balances and native ETH balances are separate. A sponsor can provide an alternative payment experience, but the network gas bill is settled in ETH.

Did the Merge create a new ETH token?

No. Ethereum preserved its balances and history through the Merge. Holders did not need to exchange old ETH for a new protocol token.

Inspect the evidence

The answer and key facts have stable claim links. These records retain the scope and qualification when reused.

Ethereum is the network; ether, abbreviated ETH, is its native asset. One ETH equals one billion gwei or one billion billion wei. Ethereum transaction fees are ultimately paid in ETH, even when an application lets a sponsor pay or presents the cost in another token.

Scope: Ethereum. Verification: verified · 2026-10-02T15:10:23.134Z.

Link to this claim
Smallest unit: One wei equals 10^-18 ETH

Scope: Ethereum. Verification: verified · 2026-10-02T15:10:23.134Z.

Link to this claim
Fee quotation: One gwei equals 10^-9 ETH

Scope: Ethereum. Verification: verified · 2026-10-02T15:10:23.134Z.

Link to this claim
Token distinction: An ERC-20 balance is contract state, separate from native ETH

Scope: Ethereum. Verification: verified · 2026-10-02T15:10:23.134Z.

Link to this claim
Revision history
  1. — First publication after primary-source research and independent automated verification.

On the Understand Ethereum path · Learn next: Ethereum accounts: keys, contract code and delegated accounts

Source register

Sources and references

Retrieval dates and locators are recorded individually.
  1. Introduction to etherethereum.org contributors

    Defines ETH, wei and gwei, the transaction value field and the role of ETH in fees and staking.

    Locator: What is ether; denominations; transferring ether · Version / scope: dcc900ff125891da5b6c723b905a7113cf1bd864 · Retrieved: 2026-10-02T14:42:49.460408+00:00Open source
  2. Gas and feesethereum.org contributors

    Supports gas units, ETH/gwei units, base/priority fees, resource limits and charges for executed failed transactions.

    Locator: How are gas fees calculated; base fee; gas limit · Version / scope: dcc900ff125891da5b6c723b905a7113cf1bd864 · Retrieved: 2026-10-02T14:35:40.393022+00:00Open source
  3. ERC-4337: Account Abstraction Using Alt MempoolEthereum Request for Comments

    Defines user operations, bundlers, programmable validation and sponsored gas settlement.

    Locator: Abstract; definitions; UserOperation; EntryPoint; paymasters · Version / scope: 583335b7912e51b1ea515bb662532dd29b27e786 · Retrieved: 2026-10-02T14:35:55.049363+00:00Open source
  4. ERC-20: Token StandardEthereum Request for Comments

    Defines fungible token balances, optional display metadata and spending allowance behavior.

    Locator: Methods: decimals, balanceOf, transfer, approve, transferFrom, allowance · Version / scope: 583335b7912e51b1ea515bb662532dd29b27e786 · Retrieved: 2026-10-02T14:35:55.037727+00:00Open source
  5. Ethereum accountsethereum.org contributors

    Supports accounts versus wallet software and account state fields. The older empty-code EOA description is qualified using EIP-7702.

    Locator: Account types; an account examined; a note on wallets · Version / scope: dcc900ff125891da5b6c723b905a7113cf1bd864 · Retrieved: 2026-10-02T14:35:40.369782+00:00Open source
  6. How ETH supply changed after the Mergeethereum.org contributors

    Supports consensus issuance versus fee burning; historical issuance estimates are not used as current rates.

    Locator: Post-merge issuance; the burn · Version / scope: dcc900ff125891da5b6c723b905a7113cf1bd864 · Retrieved: 2026-10-02T14:35:44.215542+00:00Open source
  7. EIP-1559: Fee market changeEthereum Improvement Proposals

    Defines the base-fee burn, tip, maximum fee and effective gas price calculation.

    Locator: Abstract; specification; reference implementation · Version / scope: ac912ca6a9685590345dd8e5736cda75976d0131 · Retrieved: 2026-10-02T14:35:51.249311+00:00Open source
  8. The Mergeethereum.org contributors

    Supports the 2022 consensus transition, preservation of history and ETH balances, and separation from fee scaling and withdrawals.

    Locator: What was the Merge; users and holders; misconceptions; relationship between upgrades · Version / scope: dcc900ff125891da5b6c723b905a7113cf1bd864 · Retrieved: 2026-10-02T14:35:43.712420+00:00Open source
How this article was made

Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.

Editorial method and corrections

Degrees of Satoshi editorial project. “Ether and Ethereum: the asset, the network and the units.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/ether-and-ethereum/