Ether (ETH) is the main internal crypto-fuel of Ethereum and is used to pay transaction fees.
The Ethereum network includes its own built-in currency, ether, which serves the dual purpose of providing a primary liquidity layer to allow for efficient exchange between various types of digital assets and, more importantly, of providing a mechanism for paying transaction fees. For convenience and to avoid future argument (see the current mBTC/uBTC/satoshi debate in Bitcoin), the denominations will be pre-labelled:
- 1: wei
- 10^12: szabo
- 10^15: finney
- 10^18: ether
This should be taken as an expanded version of the concept of "dollars" and "cents" or "BTC" and "satoshi". In the near future, we expect "ether" to be used for ordinary transactions, "finney" for microtransactions and "szabo" and "wei" for technical discussions around fees and protocol implementation; the remaining denominations may become useful later and should not be included in clients at this point.
The issuance model will be as follows:
- Ether will be released in a currency sale at the price of 1000-2000 ether per BTC, a mechanism intended to fund the Ethereum organization and pay for development that has been used with success by other platforms such as Mastercoin and NXT. Earlier buyers will benefit from larger discounts. The BTC received from the sale will be used entirely to pay salaries and bounties to developers and invested into various for-profit and non-profit projects in the Ethereum and cryptocurrency ecosystem.
- 0.099x the total amount sold (60102216 ETH) will be allocated to the organization to compensate early contributors and pay ETH-denominated expenses before the genesis block.
- 0.099x the total amount sold will be maintained as a long-term reserve.
- 0.26x the total amount sold will be allocated to miners per year forever after that point.