What is Ethereum Virtual Machine (EVM) and How it Works?

Ever wondered how Ethereum actually runs smart contracts behind your favorite dApps? Not that it should worry you but if, like me, you like to gain a deeper understanding of things that you are dealing with, you’ve got to know what an Ethereum Virtual Machine is!

Simply put, Ethereum is like a global computer and EVM (Ethereum Virtual Machine) is its operating system. Without this BTS magic, there is no decentralized gaming, no consistency, and basically no security.  

Today, we will learn exactly what EVMs are and how they work. Let’s get started:

What is an Ethereum Virtual Machine (EVM)?

First of all, many people ask, ‘what does evm stand for’? The answer is Ethereum Virtual Machine. It is the computation engine that runs and manages the state of EVM blockchain and enables its functionality of smart contracts. The EVM, itself, is maintained withing the software being used by clients to run a node on Ethereum.

The next question usually is what is the purpose of evm in blockchain? The purpose of EVM is to maintain consensus across the Ethereum blockchain. It ensures that all nodes agree on the state of the blockchain. This agreement, or consensus, is crucial to maintain the integrity and security of the Ethereum Network. What powers ethereum virtual machine is the collective computing resources of the Ethereum Network, itself.

So, if you were wondering what is evm in blockchain, here’s your answer. Now, let’s take a trip down the memory lane and see how it all started.

Historical Context of Ethereum Virtual Machine (EVM)

Back in 2015, Ethereum was launched as a decentralized world computer aimed at unlocking programmable blockchain applications. The concept of EVM was conceived by Vitalik Buterin who believed that Ethereum could run as the engine executing smart contracts throughout the network.  

In its early days, Ethereum Virtual Machine (EVM) was quite simple. It used to only support stack-based architecture and run on limited instructions. Then came Solidity, and everything changed...

With Solidity as the programming language, Ethereum's popularity grew and with that came some major upgrades. For instance, Byzantium (2017) and Constantinople (2019) were introduced to offer new opcodes and gas cost adjustments to improve efficiency. In the meantime, EVM-compatibility became the gold standard for other blockchains (like Binance Smart Chain, Polygon, and Avalanche), allowing them to run Ethereum-based smart contracts with little to no modification.

Despite its age, the EVM remains the most battle-tested and widely adopted smart contract runtime in the blockchain world.

Core Concepts

Now that we know exactly how EVM started and evolved, let’s discuss some of its core concepts.

Turing Completeness

The EVM is Turing-complete which simply means it can run any program you can think of, if it is provided the time and resources to do it. This also means that smart contracts operating on Ethereum aren't limited to sending and receiving tokens, they can also perform complex logical operations.

Gas Mechanism  

Every decentralized operation has a gas cost which is basically a measure of computational effort. When you send a transaction with a smart contract (or even interact with it), you pay an amount of gas fees in ETH. The more complex the operation, the greater the gas fee. This fee protects your network and incentivizes developers to write optimized code.

Smart Contracts

Ethereum Virtual Machine literally exists to process and execute smart contracts. These are bits of code that live permanently on the blockchain and automatically carry out instructions when certain conditions are met. For example, a DeFi protocol can automatically lend funds, a DAO can vote on governance decisions, or an NFT can transfer ownership - all without any human intervention.

EVM Architecture

Now that we’ve covered the what and why of the EVM, let’s discuss the how. Behind this super machine is a well-engineered stack-based system built to reliably execute smart contracts in a decentralized environment.  

Here’s what’s going on beneath the surface of EVMs:

Stack-Based Machine

The Ethereum Virtual Machine operates as a stack-based virtual machine using a last-in, first-out (LIFO) stack to process instructions. You can think of it like a pile of plates; whatever goes in last comes out first.  

All data manipulation happens on this stack: values are pushed onto it, operations are performed, and results are pushed back on. This design keeps the EVM simple and compact, which is crucial when the same computation has to run identically across thousands of nodes.

Bytecode Execution

Smart contracts aren’t executed in the high-level languages they’re written in (like Solidity or Vyper). Instead, they’re compiled into EVM bytecode, a low-level, binary format that the EVM can understand. When a contract is deployed, its bytecode gets stored on the blockchain. Every time someone interacts with that contract, the EVM reads and executes that bytecode to determine what happens next.

Opcode System

The EVM uses a defined set of opcodes (or operation codes) which are essentially low-level commands. These range from simple math operations to more complex tasks like storage access.  

As of now, the EVM supports around 144 opcodes, and these are what the EVM bytecode ultimately boils down to. High-level Solidity instructions are just friendly abstractions that compile into sequences of these opcodes.

How Does EVM Work?

When you start any operation the Ethereum blockchain, the EVM jumps into action. Here's basically how it works:

1. Transaction Function is Created: You write some human-readable code on Solidity, which is then compiled into EVM bytecode. This bytecode can be sent to the Ethereum network within the transaction.
2. Transaction Reaches Miners: In PoS Ethereum, miners or validators pick up your transaction and prepare to add it to the block.
3. EVM Executes the Bytecode: Since every validator is running the same instructions in the EVM, any node giving different result is blocked.

Once this entire process is completed, the state of Ethereum's big data is updated and the new state is stored in the blockchain. The working is pretty simple and while Ethereum is highly popular in the blockchain circle, its computation machine still has a few security considerations.

Security Considerations

Since every contract runs on a public, decentralized blockchain, even the smallest oversight can be exploited by hackers. Therefore, security is crucial when working with EVM. Below are the top 05 security considerations - along with their risks, causes, and recommended prevention strategies - for your understanding.

Benefits of EVM and Limitations of EVM

Ethereum Virtual Machines allow dApps to run consistently and smoothly across the Ethereum blockchain and while the features of ethereum virtual machine make Ethereum a very powerful platform for blockchain innovation, it comes with its own trade-offs such as security risks and scalability challenges.

Let's discuss the benefits and limitations one by one:

The Future of EVM: What’s Next?

The Ethereum Virtual Machine (EVM) isn’t just surviving, it’s thriving and evolving fast. As Ethereum scales with Layer 2 solutions like Optimism and zkSync, EVMs are going along for the ride, powering faster, cheaper transactions without compromising decentralization.

New tech like zkEVMs promises massive improvements in scalability and privacy, all while keeping compatibility with existing smart contracts. Meanwhile, EVM-compatibility has become the gold standard, if a blockchain wants developers, it better speak EVM.

In short, the EVM is becoming the universal engine of Web3. It’s adapting to new demands, scaling across evm compatible chains, and staying at the center of everything from DeFi to NFTs. The future is multi-chain, and the EVM is driving it.

Conclusion

EVM is undoubtedly the backbone of Ethereum’s decentralized ecosystem. From its conception in 2015, it has been enabling trustless, secure, and consistent execution of smart contracts across the blockchain, and while it comes with some limitations and security considerations, EVM is clearly driving the future of defi.