Transactions on the Ethereum blockchain can take various forms, extending beyond simple ETH transfers between addresses. As a blockchain designed for programmable money, Ethereum transactions can encompass multiple steps with conditional logic and interactions with various smart contracts.
The Ethereum blockchain hosts a variety of smart contracts, serving as lending/borrowing facilities, crypto exchange services, lottery contracts, and more. Ethereum's primary purpose is to enable the creation and execution of these smart contracts.
For example, a transaction on Ethereum might involve the following multiple steps within a single transaction:
- User borrows X amount of token Y from lending smart contract 1.
- Trades the borrowed Y tokens for W tokens on exchange smart contract 2.
- Trades W tokens for Y tokens on another exchange smart contract 3.
- Returns the borrowed Y tokens to lending smart contract 1.
All these steps can be part of a single transaction, allowing users to leverage arbitrage opportunities across different decentralized crypto exchanges on the Ethereum platform. Consequently, Ethereum transactions may include multiple steps and entail value exchanges between various smart contract entities.