Decentralization, fragmentation, and security were the primary selling factors of blockchain technology in the early days. The fact that a system so elaborate and sophisticated does not rely on a central point of command but rather thousands, if not millions, of machines globally was quite an attractive facet of blockchain in its early days.
However, one critical issue arose as more blockchains emerged: the chains’ incompatible and non-interoperable nature. Most early blockchains were created to only compete with the others, causing some chaos in an otherwise young and growing market.
While the competitive nature breeds growth and a healthy market, it also brings more complexity for average users. For instance, they must use different wallets for different chains, making storing some of these private keys quite hectic.
Non-interoperability also means that an investor cannot use one asset on two separate chains — you cannot enjoy the full benefits of asset A on blockchain B.
But in 2013, Vitalik Buterin, the co-founder of Ethereum, proposed a solution, the Ethereum Virtual Machine. While he philosophized and conceptualized the idea, another Ethereum co-founder, Gavin Wood, did most of the development work.
It’s as if Vitalik foresaw a universe where many blockchain technologies could interact, enabling cross-chain transfers. That is one of the benefits EVM provides to compatible chains.
This guide is part 2 of our article on understanding EVM. It digs deeper into the world of this technology, specifically focusing on EVM compatibility and its benefits.
Explanation of EVM compatibility
EVM compatibility is a blockchain network’s ability to support and execute smart contracts specially designed to operate on the Ethereum Virtual Machine (EVM). But what is the Ethereum Virtual Machine
The EVM is a title given to a decentralized computing environment within the Ethereum network, where developers can create and deploy decentralized applications (dApps) and smart contracts. It is a Turing-complete machine and can execute different computations as long as they are described algorithmically.
Now, back to EVM compatibility. This compatibility ensures that smart contract developers on other non-EVM blockchain networks can quickly write and deploy smart contracts that operate on EVM without necessarily learning new programming languages or changing codes.
The primary perk associated with EVM compatibility is its promotion of an industry standard in the DeFI and DApps ecosystem. Strict adherence to the EVM standards enables blockchain networks to interact seamlessly, allowing the transfer of crypto assets across blockchains.
But the question is, how do blockchains achieve EVM compatibility?
It’s simple. The EVM engine executes smart contracts after interpreting a bytecode generated during the contract’s creation. The interpretation involves sequentially processing each operation following a stack-based model.
So, blockchains achieve EVM compatibility by, like the EVM, working to interpret and execute bytecodes operating on the EVM. By interpreting the bytecode, the alien blockchain network can run Ethereum-based contracts and DApps without serious modifications.
Throughout its short history, i.e., since 2015, the EVM has played a central role in the ever-evolving blockchain technology. It is gaining prominence as the go-to standard for smart contract execution and, as such, has influenced how many other blockchain platforms with similar intentions have been designed.
Benefits of EVM Compatible Blockchains
EVM compatibility has been shaping up as the cornerstone of the blockchain universe, with many benefits for developers, businesses, and stakeholders. Here are a few critical benefits of EVM-compatible blockchains:
Interoperability
One primary benefit of EVM compatibility is the ability to bring blockchain interoperability. Owing to EVM compatibility, blockchains can enjoy an almost seamless interaction and communication. Hence, dApps and smart contracts on one EVM chain can function as they do on another without modifications.
Interoperability is critical to a global and decentralized internet and financial system. As a crucial feature of the EVM, it leads to a decentralized and interconnected network of blockchain platforms.
Scalability and Efficiency
The compatibility with various blockchains and external layers leaves room for extended scalability and efficiency. Ethereum as it is a network with very poor scalability and lots of inefficiencies.
For instance, the Ethereum blockchain can only natively process about 15 transactions every second. Plans are underway to improve the performance of this network, but they have yet to be successful.
As such, we have seen a meteoric surge of alternative layers, also called layer 2s. L2 solutions afford Ethereum scalability and efficiency by reducing the workload of the mainchain processing the transactions off the chain. This can only be possible if the L2 is EVM compatible.
Developer-Friendly Environment
Thirdly, EVM affords an amicable environment for developers. EVM itself is coded and accepts applications written using the Solidity language. However, developers can choose from many other languages to code smart contracts with and deploy on EVM.
By offering many languages, the EVM reduces the time developers would otherwise spend learning new programming languages and frameworks.
Moreover, the EVM itself offers developers extensive documentation, tutorials, and community support, especially for those interested in creating on top of EVM-compatible chains. This simplifies things.
Security
Another critical benefit of the EVM is security. The Ethereum Virtual Machine implemented a robust security model, which has been rigorously tested and audited over the years. As a result, it affords a secure environment for smart contract execution.
This proven security model particularly appeals to enterprises and developers looking for a reliable and stable platform to build their applications. Blockchains compatible with the EVM architecture also inherit the security perks.
Access to the Ethereum Ecosystem
Interestingly, the interoperability also includes links to the Ethereum ecosystem. Developers leveraging EVM can enjoy a vast library of tools and infrastructure created primarily for Ethereum.
Metamask will be the largest DeFI wallet in 2024. Developers can integrate apps like Metamask, which enables more people to access DeFI protocols and other decentralized apps.
Standardized Token Models
Another benefit of EVM-compatible chains is the use of popular token standards, such as the ERC-20 and ERC-721 standards. These standards were fashioned to foster simplicity in creating, managing, and trading tokens across platforms.
For example, an ERC-20 token created on one EVM-compatible blockchain can be quickly listed on exchanges and used in various dApps without compatibility issues. This standardization promotes a more cohesive and efficient token economy.
Examples of EVM Compatible chains
Of course, the crypto world is a whole of EVM-compatible blockchains. Some of those blockchains have attained massive adoption since the beginning. Among the popular EVM-compatible chains include:
- Binance Smart Chain (BSC): BSC is primarily renowned for its low transaction fees and high performance, quickly climbing the ranks as a developer’s favorite. The blockchain is entirely compatible with the EVM, enabling a seamless migration of Ethereum-based dApps.
- Polygon: The Matic Network was initially designed to provide a highly scalable solution for near-instant transactions. It’s a layer two solution for Ethereum, with high throughput and low costs. EVM’s compatibility ensures developers can deploy their Ethereum-based DApps to the network.
- Avalanche: Another highly scalable blockchain platform, Avalanche, offers a home for custom blockchains and dApps. Its compatibility with EVM allows developers to deploy Ethereum smart contracts quickly.
- Arbitrum: Another layer two solution, Arbitrum, is entirely compatible with EVM. Hence, Dapps can be easily migrated into this L2. The perks of Arbitrum for Ethereum-based dApps include higher scalability, lower charges, and faster transactions.
- Optimism: L2 scaling network Optimism leverages Optimistic Rollups to bolster transaction throughput and reduce fees. Its EVM compatibility allows developers to enjoy easy deployment of smart contracts.
- zkSync: An L2 network capturing the crypto world by storm, zkSync is also compatible with EVM. As such, developers can deploy Ethereum-focused contracts on zkSync.
Other blockchain networks enjoying EVM compatibility include Fantom, Cronos, Klaytn, Canto, Tron, and Cardano.
Impact on the broader DeFi ecosystem
EVM compatibility plays a significant role in the DeFI realm, with the interconnection of the blockchain ecosystem. Foremost, EVM enhances interoperability, with developers deploying dApps with minimal modifications. Therefore, the barriers to entry into the DeFI universe are lessened.
Secondly, other chains and L2 solutions can tap into Ethereum’s extensive and rapidly growing DeFI ecosystem, including lending platforms, Dexs, staking networks, etc. As such, the DeGI space sees more market depth and liquidity and increases user opportunities.
Final Word
This guide has examined EVM and its usability within and outside the Ethereum ecosystem. While EVM is a unique engine for Ethereum, dozens of other crypto projects, including the ones mentioned above, benefit from this technology.
The benefits arising from EVM compatibility include interoperability, security, scalability, efficiency, and standardization of token models.