In the ever-evolving landscape of blockchain technology, the concept of EVM-compatible blockchains has emerged as a pivotal force, reshaping how decentralized applications (DApps) are developed and deployed. At the heart of this innovation lies the Ethereum Virtual Machine (EVM), a revolutionary component that has unlocked new possibilities in the realm of programmable and interoperable blockchain networks.
EVM compatibility is a beacon of versatility, offering blockchain platforms the capability to integrate seamlessly with the Ethereum ecosystem. This compatibility holds profound significance in the blockchain space, addressing critical challenges and fostering a collaborative environment for developers and users alike.
As the backbone of smart contract execution, EVM compatibility enhances interoperability, accelerates application development, enhances digital asset custody parameters for protocols, and unlocks a plethora of opportunities for blockchain networks seeking to leverage the advantages of Ethereum’s vibrant ecosystem.
Unpacking EVM – Ethereum Virtual Machine
In order to understand Ethereum Virtual Machine (Ethereum), we must first understand what Ethereum is. Ethereum is a decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (DApps). It is the first platform to introduce the concept of smart contracts. Close to 1 million transactions are processed on the Ethereum blockchain daily.
Now, what is an Ethereum Virtual Machine? Ethereum Virtual Machine, or EVM, is a software environment sitting atop the Ethereum layer that allows developers to deploy smart contracts on the Ethereum Chain. It is called a virtual machine because it serves as a virtual computer running on the nodes of the Ethereum network.
EVM is a game-changing concept as it enables the auto-execution of smart contracts, eliminating human intervention for enhanced efficiency. Every time a user initiates a transaction involving smart contracts stored on the Ethereum blockchain, the EVM processes and executes the corresponding code to facilitate the execution of the smart contract.
How Does The EVM Work?
The EVM stands as a Turing-complete virtual machine capable of executing any algorithm or program. This fundamental characteristic grants Ethereum its ‘programmability,’ empowering developers to craft intricate smart contracts and construct decentralized applications (dApps) atop the Ethereum network.
A noteworthy attribute of the EVM lies in its deterministic execution capability. This means that a given smart contract consistently produces the same output for identical input, regardless of the execution location or executor. This deterministic quality is paramount for the Ethereum network’s consensus mechanism, ensuring unanimity among all nodes regarding the network’s state. Additionally, deterministic execution guarantees that smart contracts are executed precisely as coded, free from external influences.
Furthermore, the EVM is intentionally designed to operate in isolation from the host computer’s operating system, prioritizing security and shielding the network from potential attacks. Smart contracts undergo execution within the secure confines of the EVM environment, creating a protected sandbox for code execution. This isolation dictates that the EVM solely interacts with the Ethereum network, creating a barrier against malicious entities attempting to breach the underlying system or compromise the network’s security.
What Are Ethereum Compatible Blockchains?
Ethereum-compatible blockchains are created by forking certain parts of the Ethereum ecosystem to facilitate cheaper and faster transactions on-chain.
Here are some Ethereum-compatible blockchains:
Binance Smart Chain (BSC):
Binance Smart Chain is a blockchain network created by Binance that offers fast and low-cost transactions. It is EVM-compatible, allowing developers to port their Ethereum-based projects to BSC with minimal modifications.
Polygon (formerly Matic):
Polygon is a layer 2 scaling solution for Ethereum that aims to enhance scalability and reduce transaction costs. It is EVM-compatible, enabling seamless interoperability with the Ethereum network. DApps and smart contracts built for Ethereum can often run on Polygon without significant changes.
Avalanche:
Avalanche is a decentralized platform that supports custom blockchain networks and interoperates with various networks, including Ethereum. It achieves compatibility through the implementation of the EVM, facilitating the deployment of Ethereum-compatible applications.
Huobi Eco Chain (HECO):
Huobi Eco Chain is a decentralized, high-performance blockchain that is fully compatible with the Ethereum network. It allows developers to deploy Ethereum-based projects on HECO, benefiting from its high throughput and low transaction fees.
Fantom Opera:
Fantom Opera is a high-performance, fully EVM-compatible blockchain that aims to provide fast and secure smart contract execution. Developers can migrate their Ethereum-based applications to Fantom Opera with ease.
xDai Chain:
xDai Chain is a sidechain to Ethereum that uses the EVM. It offers fast and inexpensive transactions, making it suitable for various use cases, including payments and DApps. Smart contracts developed for Ethereum can be deployed on xDai Chain.
Harmony:
Harmony is a sharded blockchain platform compatible with the EVM. It focuses on scalability and cross-border finance, allowing developers to deploy and run Ethereum-compatible applications on its network.
Why Do We Need EVM-Compatible Blockchains?
Ethereum is hands down the most popular and widely used blockchain network. However, increasing usage often leads to network congestion. Problems like extremely high transaction costs (gas) and transaction delays remain even after several upgrades.
As stakeholders realized the limitations of the Ethereum network, they started building sidechains and Layer 2 chains to boost scalability, i.e., the capability to facilitate more transactions (boost TPS).
EVM-compatible blockchains are:
- Scalable: They have high TPS (transactions per second) and hence accommodate a higher number of transactions than the Ethereum mainnet. Scalability can also be achieved by rendering EVM chain assets into secure wallet structures like MPC wallets, which is easily configurable to distribute governance and scale on-chain transactions.
- Interoperable: Interoperability, i.e., the ability of different chains to interact with each other, is the need of the hour with businesses and institutions dealing in multiple cryptocurrencies. EVM compatibility promotes interoperability between different blockchain networks, allowing developers to create decentralized applications (DApps) and smart contracts that can seamlessly run on various EVM-compatible blockchains without major modifications.
- Reduced Transaction Costs: A key hurdle in traditional businesses’ mass adoption of blockchain is high transaction costs. Ethereum-compatible blockchains often provide lower transaction fees compared to the Ethereum mainnet, attracting developers and users to contribute to increased DeFi activity.
- Experimentation and Innovation: Blockchain as a technology is still in its infancy, with plenty of use cases remaining to be explored. Be it gaming apps like Xai or custody solutions like Liminal, developers and innovators have to keep on experimenting to explore the potential of smart contracts. EVM-compatible blockchains provide a playground for experimentation and innovation, allowing developers to explore novel consensus mechanisms, governance models, and tokenomics while still benefiting from the familiarity of Ethereum’s development environment.
Final Word
As the use cases of the Ethereum network grow, the impact of high gas fees and lack of scalability is going to be magnified. However, the unparalleled security that Ethereum mainnet offers has to be taken along to build and deploy secure Dapps. EVM-compatible blockchains provide developers the middle ground by allowing them to retain the core principles of the Ethereum mainnet while leveraging the features of sidechains and Layer 2 networks to build scalable, cost-efficient, and interoperable Dapps.
