What is EVM (Ethereum Virtual Machine) in Blockchain
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Many people have heard of smart contracts, decentralized applications, and decentralized autonomous organizations, but only some think about the technology that makes it all possible. That key technology is the Ethereum Virtual Machine (EVM). In this article, we’ll take an in-depth look at what EVM means, how it works, and why its role is so important to the blockchain ecosystem and Web3.
What is an Ethereum Virtual Machine?
An EVM is a virtual machine that runs smart contracts and decentralized applications (dapp) on the Ethereum network. The EVM executes smart contract code as it would be done on your computer but in a decentralized and secure blockchain environment.
Vitalik Buterin, co-founder of Ethereum, created EVM in 2013. He proposed Ethereum as a platform for executing smart contracts. Together with a team of developers, including Gavin Wood, who created the Solidity language, they developed EVM as the basis for a programmable blockchain.
What Is the Ethereum Virtual Machine For?
The EVM meaning lies in its ability to provide a standardized environment for executing decentralized logic securely and reliably. EVM provides a standardized environment where smart contract code is interpreted and executed on every node in the network, ensuring the same result across the entire blockchain. With EVM crypto, developers can build and run complex applications such as DeFi protocols, NFT platforms and decentralized exchanges without having to build infrastructure from scratch.
EVM meaning crypto is also about network security and management. It isolates code execution, preventing bugs or malware from affecting the underlying blockchain. In addition, the gas mechanism in EVM measures the cost of computational operations and prevents the network from overloading, making it reliable and resilient to operate in a decentralized environment.
How Does EVM Work?
EVM Machine is an isolated code execution environment designed to process smart contracts. When a user submits a transaction to the Ethereum blockchain, it enters a queue where it is processed by miners (or validators, depending on the consensus algorithm). The EVM then interprets the transaction using smart contract bytecode, which is executed sequentially and deterministically. This process ensures that all nodes in the network receive the same result, which is critical for decentralization.
The Role of “Gas” in Evm
Ethereum’s gas (gwei) is an internal unit used to pay for transactions performed in the EVM. One gwei is equal to 0.000000001 ETH. It can be compared to the price of delivering a parcel: the more complex and longer the route, the more expensive the delivery will be.
The gas limit for each Ethereum transaction depends on the operation’s complexity and the current network load. When user activity is high, the cost of transaction processing increases. If the exposed gas limit is insufficient for a complex transaction, the EVM aborts its execution, and the transaction is not written on the blockchain.
The gas mechanism prevents the possibility of running infinitely complex calculations that would overload the network. Thus, gas not only pays for EVMs, but also serves as an important tool to protect the blockchain from attackers and malicious attacks.
EVM-enabled blockchains
Ethereum Virtual Machine has limitations, including high storage cost, low scalability, increased gas price when the Ethereum network is overloaded, and certain limitations in programming smart contracts. These drawbacks create challenges for users and developers, especially with the growing demand for decentralized applications.
The solution to these problems has been EVM-compliant blockchains, which use a similar environment to execute code but offer lower fees by implementing scalable technologies. This allows developers to move their applications from the Ethereum ecosystem to more scalable networks without having to rewrite smart contracts.
One such solution is sidechains – independent blockchains with their consensus algorithm and parameters that support EVMs. Cryptocurrency networks include Polygon PoS, Gnosis Chain, and Loom Network.
Another approach isLayer 2 solutions (Layer 2). For example, the Optimism platform uses the Optimistic Rollups protocol: smart contracts are processed by the EVM, and the calculations and contract state are stored in a separate Optimistic Virtual Machine. These technologies significantly improve efficiency and reduce transaction costs.
Examples of EVM use cases
The Ethereum Virtual Machine opens up a wide range of possibilities for various innovations in the blockchain industry. Here’s what the technology offers:
- ERC-20 and ERC-721 standard tokens: developing cryptocurrencies and NFTs for various projects.
- Launching decentralized exchanges (DEX): platforms such as WhiteSwap use EVM to automate trading operations. In addition, WhiteSwap is integrated with Whitechain, an EVM-enabled blockchain platform, which extends the exchange’s capabilities and functionality.
- Management of Decentralized Autonomous Organizations (DAO): voting and decision making via smart contracts.
- DeFi lending protocols: projects such as Aave and Compound use EVMs to manage deposits, loans and interest rates.
- Blockchain-based game development: creating game assets and tokens to exchange or trade.
- Integrating Layer 2 solutions: scalable platforms like Arbitrum and Optimism use EVM to interact with the Ethereum network.
- NFT management platforms: using smart contracts to issue, sell and track non-fungible tokens.
It’s worth noting that Ethereum is not alone in using EVMs:
- Ethereum Classic: a blockchain for creating and executing smart contracts, powered by the Proof-of-Work consensus algorithm.
- Fantom: a smart contract network based on directed acyclic graph (DAG), fully compatible with EVM.
- Polygon: an ecosystem of protocols and blockchains built on Ethereum for scalability and dapp integration.
- VeChain: a blockchain platform that utilizes the Proof-of-Authority consensus mechanism to improve efficiency and security.
Advantages and Disadvantages of EVM
| Pros of EVM | Сons of EVM |
| Fully compatible with Ethereum, making it easy to transfere dapp between networks. | High cost of gas when the Ethereum network is overloaded. |
| Support for standardized smart contracts such as ERC-20 and ERC-721. | Limited scalability at the Ethereum base layer level. |
| Interoperability with EVM-compatible blockchains (Polygon, etc.). | Difficulty in programming due to the need to consider the gas mechanism. |
| Deterministic execution, providing the same results on all nodes of the network. | Limited performance due to the peculiarities of the blockchain architecture. |
| Broad support among developers and tool ecosystem. | Possibility of bugs in smart contracts that cannot be changed once they are deployed. |
The Future of EVM
The future of EVM is related to its further development and optimization within scalable solutions such as Ethereum 2.0 and Layer 2 (Optimism, Arbitrum). Performance improvements, lower transaction costs and enhanced security are expected. Increased integration with multichain ecosystems is also planned, making EVM an even more versatile platform for building and managing decentralized applications in Web3.
In July 2022, Vitalik Buterin revealed a strategy for the gradual evolution of the Ethereum blockchain. One of the key steps in this plan will be replacing the Ethereum Virtual Machine with a more modern virtual machine – Ethereum WebAssembly (eWASM).
Conclusion
EVM is not just a technological innovation but a fundamental platform upon which an ecosystem of smart contracts and decentralized applications is built. Understanding EVM opens up access to new opportunities in the blockchain world, providing versatility and flexibility in interactions between different networks. By mastering this technology, you can better understand how the key elements of Web3 work and how to use them to create tomorrow’s solutions.
