Abstract With the rapid development of blockchain technology and the increasing demand for partial decentralization of the Internet, the application of underlying technology based on blockchain has been widely concerned. Along with decentralized objects, the programmable financial system represented by Ethereum has been gotten more and more attention. However, smart contract sacrifices its security to improve decentralization. So Ethereum has the fatal problem with a large number of users, and negligence of users in coding contract threatens the entire Ethereum network. Therefore, this paper aims to research and expand applications of smart contract usage in Ethereum blockchain. We start from basic concepts to define structure of Ethereum, and then discuss security issues on smart contract. In the end, an optimized smart contract application of auction is implemented, which is useful for further consolidating and understanding of smart contract in practice.