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I am beginning to start with ethernet PHY. As per my understanding, digital signal will be transmitted and we apply encoding scheme to incorporate clock information into the data signal. Can't we just embed some start and end bit before and after each bit respectively. So that we can decode each bit separately at receiver ?

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Yes, but you'd spend a lot of time on clock recovery.

Using start and stop bits is a rather primitive method of embedding a clock inside the data stream -- because only the clock phase is transmitted, you need a link training phase after every data word.

Ethernet uses a longer training phase with a preamble that allows both phase and frequency recovery, which allows transmission of a longer data block, reducing the amount of overhead.

This can be reduced further by transmitting "idle" frames that allow the receiver clock to remain synchronized when there is no data to be sent -- this way, even longer ("jumbo") frames can be received.

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Depends on which Ethernet you are talking about.

The 10 Mbps versions (10Base5, 10Base2, and 10BaseT) alredy did that, by using Manchester encoding. To send 10 Mbps of payload data, the Manchester encoded signal needs to have double the data rate to contain the clock for each bit, pushing the encoded rate to 20 Mbps, requiring much higher bandwidth. So overhead is 100%.

Those only sent out the packet as burst of data and there was nothing transmitted between packets, so you needed to recover and lock on to the clock at the burst preamble and detect the packet start bit for receiving the payload bits.

If you want to send a start bit, data bit, and stop bit for each data bit, it triples the data rate, which makes no sense.

So something like with UART, where the whole 8-bit byte is framed with a start and stop bits to end up with 10-bit frames, is used.

With 100BaseT, there is a form of 8b10b encoding used, which basically means every 8-bit byte is converted into 10-bit symbols in a way that guarantees that there are transitions during a symbol to stay locked on to the bits. This only adds 25% of overhead and which is why encoded 100BaseT bit rate is 125Mbps. Also the link is being kept synchronized to these symbols by transmitting an IDLE control symbol which is otherwise never going to appear as symbol for transmission of data. The 125 Mbps data stream is further MLT3 encoded to use about 32 MHz of bandwidth on cable.

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