Intro to ETN
Prerequisites
To help you better understand this page, we recommend you first read Introduction to the Electroneum Smart Chain.
What is a cryptocurrency?
A cryptocurrency is a medium of exchange secured by a blockchain-based ledger.
A medium of exchange is anything widely accepted as payment for goods and services, and a ledger is a data store that keeps track of transactions. Blockchain technology allows users to make transactions on the ledger without reliance upon a trusted third party to maintain the ledger.
The first cryptocurrency was Bitcoin, created by Satoshi Nakamoto. Since Bitcoin's release in 2009, thousands of cryptocurrencies have been created across many different blockchains.
What is ETN?
ETN is the cryptocurrency used for many things on the Electroneum network. Fundamentally, it is the only form of payment for transaction fees. ETN is also used as a form of collateral in the DeFi lending markets, as a unit of account in NFT marketplaces, as payment earned for performing services or selling real-world goods, and more.
Electroneum allows developers to create decentralized applications (dapps), which all share a pool of computing power. This shared pool is finite, so Electroneum needs a mechanism to determine who gets to use it. Otherwise, a dapp could accidentally or maliciously consume all network resources, which would block others from accessing it.
ETN supports a pricing mechanism for Electroneum's computing power. When users want to make a transaction, they must pay ETN to have their transaction recognised on the blockchain. These usage costs are known as gas fees, and the gas fee depends on the amount of computing power required to execute the transaction and the network-wide demand for computing power at the time.
Therefore, even if a malicious dapp submitted an infinite loop, the transaction would eventually run out of ETN and terminate, allowing the network to return to normal.
It is common to conflate Electroneum and ETN — when people reference the "price of Electroneum," they are describing the price of ETN.
Minting ETN
Minting is the process in which new ETN gets created on the Electroneum ledger. The underlying Electroneum protocol creates the new ETN, and it is not possible for a user to create ETN.
ETN is minted as reward for each block confirmed by the consensus mechanism.
Burning ETN
As well as creating ETN through block rewards, ETN can be destroyed through a process called 'burning'. When ETN gets burned, it gets removed from circulation permanently.
ETN burn occurs in every transaction on Electroneum. When users pay for their transactions, a base gas fee, set by the network according to transactional demand, gets destroyed. This, coupled with variable block sizes and a maximum gas fee, simplifies transaction fee estimation on Electroneum Smart Chain. When network demand is high, blocks↗ can burn more ETN than they mint, effectively offsetting ETN issuance.
Burning the base fee hinders a block producers ability to manipulate transactions. For example, if block producers received the base fee, they could include their own transactions for free and raise the base fee for everyone else. Alternatively, they could refund the base fee to some users off-chain, leading to a more opaque and complex transaction fee market.
Denominations of ETN
Since the value of transactions on Electroneum can be small, ETN has several denominations which may be referenced as smaller units of account. Of these denominations, Wei and gwei are particularly important.
Wei is the smallest possible amount of ETN, and as a result, many technical implementations will base calculations in Wei.
Gwei, short for giga-wei, is often used to describe gas costs on the Electroneum Smart Chain.
Transferring ETN
Each transaction on Electroneum contains a value field, which specifies the amount of ETN to be transferred, denominated in wei, to send from the sender's address to the recipient address.
When the recipient address is a smart contract, this transferred ETN may be used to pay for gas when the smart contract executes its code.
Querying ETN
Users can query the ETN balance of any account by inspecting the account's balance field, which shows ETN holdings denominated in wei.
The Electroneum Block Explorer↗ is a tool that allows address balances to be inspected via a web-based application. Account balances can also be queried using wallets or directly by making requests to nodes.
Further Reading
Gwei Calculator↗: Use this gwei calculator to easily convert wei, gwei, and ETN. Simply type in any amount of wei, gwei, or ETN and automatically calculate the conversion. [This calculator was created for ETH, but functionally it works exactly the same for ETN]
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