When a user submits a transaction on the Ethereum network, it follows a standard journey through several main protocol components that work together to ensure the correct transfer of ETH and other tokens. These components — The Ethereum Virtual Machine (EVM), Ethereum State, mempool, and blockchain — each play a distinct role in maintaining the integrity of the settlement system.
Ethereum Virtual Machine: The EVM is responsible for interpreting and executing smart contracts. When a transaction is executed, the EVM processes the contract logic, determining the transaction outcome and what changes must be made to the Ethereum State, which in turn records who owns what. The EVM ensures that every action performed by a smart contract follows the network's rules, making it essential to transaction processing.
Ethereum State: The Ethereum State is the system's database that keeps track of all users' ether and token balances, as well as the active smart contracts. It acts as a live record of ownership and current values within the network. Every change resulting from a transaction is reflected in the Ethereum State, ensuring that participants always have an accurate view of asset ownership.
Mempool: The mempool contains all unconfirmed, valid transactions that are waiting to be included in the blockchain. When a transaction is submitted, it first enters the mempool, where it is queued and waits for validation by network participants. The mempool ensures that transactions are available to validators, who will eventually add them to the blockchain.
Blockchain: The blockchain is the shared transaction record for the Ethereum network. It logs every transaction and ensures that all users are in agreement about the current Ethereum State. When a transaction is validated and included in a new block, it becomes an immutable part of the blockchain. This shared ledger ensures the integrity of transaction history and allows users to verify the entire chain of ownership.
The journey of an Ethereum transaction begins when a user authorises a transfer, which is then broadcast to the network and enters the mempool. Once the transaction is validated, the EVM executes any relevant smart contracts, and the blockchain records the confirmed transaction, updating the Ethereum State to reflect the new balances or contract states. This standardised process ensures that the network accurately tracks ownership and that tokens are correctly transferred between users.