Reference Electrode Theory: The reference electrode (RE) needs to have a well-defined and stable electrochemical potential. While no current is supposed to pass through the RE, any current that does is not supposed to affect the voltage of the electrode. These days, I think that most people use Ag/AgCl reference electrodes, as they are cheap and don't require a nasty pool of mercury. An inexpensive RE can be made from a piece of silver wire coated with silver chloride and suspended in a chloride containing solution. The operating premise is that the voltage of the electrode is determined by the energy difference between the metal and the metal chloride salt. If an electron is removed from the electrode, one atom of silver metal is converted to Ag+ and a chloride ion is picked up from solution to give AgCl. If an electron is added to the electrode, it goes on a Ag+ ion in the AgCl layer to give another atom of silver metal and a chloride ion is lost to the solution. In this way, the chemical composition that determines the voltage of the electrode remains constant.