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The Ethereum protocol is the system’s rule set, written as computer code or software. The rules create three data structures – the Beacon chain (for consensus), the execution chain (for transactions and smart contracts), and the network state.
The protocol ties these data structures together by ensuring that the execution chain’s transactions update the network state, while the Beacon chain enforces consensus - an agreement between all participants on what the correct state of the blockchain is. This coordination ensures that all nodes are aligned and maintain the same version of the blockchain and state.
The protocol also defines the environment for running programs called the Ethereum Virtual Machine (EVM), which interprets and executes smart contracts.