What is an EVM-Compatible Blockchain?

To understand EVM-compatible blockchains, let’s first grasp the basics of blockchain technology. A blockchain is a secure method of storing and transmitting data through a chain of blocks, each linked to the previous one by cryptographic keys. This design ensures that altering information in one block would require changes to all subsequent blocks, making unauthorized edits virtually impossible. As a result, blockchain is seen as a reliable method for protecting information from tampering or falsification.

What Does EVM Compatibility Mean?

Ethereum allows users to write smart contracts using Solidity, a programming language designed for this exact purpose. All of this happens in one unified environment, making it easy for different parts of the ecosystem to interact. This is where the Ethereum Virtual Machine (EVM) steps in — it’s the engine that turns your ideas into code and runs them on the blockchain.

Let's look at a simple example. Say you want to create a system for your family to manage their shared budget fairly. You’d write a smart contract that sets rules like:

• Each family member creates an ETH address.
• Everyone contributes to a shared smart contract monthly.
• No one can withdraw funds alone—everyone needs to agree.

For example, if someone wants to spend 2 ETH on household expenses, they could create another smart contract that specifies:

• 0.3 ETH for kitchen goods
• 0.3 ETH for bathroom goods
• 1.4 ETH for food

If a family member wants to buy something like a wardrobe, they’d create a contract where each person contributes what they can:

• Mother: 0.5 ETH
• Father: 1.5 ETH
• Son: 0.25 ETH
• Daughter: 0.25 ETH

As you can see, all of these smart contracts follow similar patterns. The EVM is the environment where all these contracts live and interact.

In short, the EVM acts like a messenger and task manager for smart contracts.

Beyond family budget management, the EVM can handle much more complex tasks, like drafting insurance or loan repayment contracts. It even allows for creating smaller contracts within bigger systems, like paying content creators on an information platform.

Ethereum smart contracts are primarily written in Solidity, but there are other languages like Vyper, a simpler alternative, and LLL, which is more complex and used by experienced developers. There’s also Serpent, which is Python-like and popular with enthusiasts.

On your computer, the EVM is essentially a program. It processes code, converts it into binary, and executes smart contracts. The beauty of the EVM is that it’s so versatile that many enterprise blockchain solutions use it too.

The EVM is like the brain of Ethereum, executing smart contracts and ensuring the network runs smoothly. Any blockchain that’s EVM-compatible can run these contracts, allowing it to function much like Ethereum.

One of blockchain’s biggest challenges is making different blockchains work together. Widespread adoption depends on this kind of interoperability, and the EVM plays a crucial role in helping blockchains communicate.

Ethereum was the first to introduce smart contracts, but with increased use, it faced scalability issues. Ethereum 2.0 aims to solve problems like high costs and slow transactions, but other blockchains are also developing solutions — many of which are based on Ethereum’s own open-source code. Instead of reinventing the wheel, developers often tweak Ethereum’s code for better performance and cross-chain compatibility, allowing assets to move smoothly between EVM blockchains.

Key Benefits

Bridges, or cross-chain solutions, are crucial for solving the problem of blockchain interoperability. In simple terms, they let different blockchains talk to each other by transferring tokens or data between them. The way it works is that tokens are "frozen" on one blockchain and then "minted" as synthetic tokens on another.

To make this happen, bridges use a mix of tools like oracles, smart contracts, and nodes. These tools monitor the state of the blockchains, manage transactions, and ensure everything runs smoothly. Think of it like two countries with different languages and laws — bridges act as translators and go-betweens so they can communicate.

For a long time, blockchains operated as separate systems, but with the rise of DeFi (Decentralized Finance), the need for a unified digital space became clear. Bridges are helping create that shared space by allowing assets to move seamlessly between different blockchain platforms.

The EVM plays a big role in this too. It connects with every node in the Ethereum network, overseeing smart contracts and ensuring transactions are handled efficiently. The EVM allows smart contracts to run consistently across all nodes, making it one of the most powerful virtual machines out there.

What makes the EVM so special is that it allows decentralized applications (dApps) and smart contracts to keep functioning, even if one node has issues. This reliability is especially important for developers building custom smart contracts or decentralized apps that need to work across different blockchains.

Many EVM-compatible networks have popped up, offering faster and cheaper alternatives to Ethereum. Thanks to cross-chain bridges, these blockchains can easily connect with Ethereum users, allowing for smooth fund transfers and interaction between different networks.

Overall, the EVM’s ability to ensure consistent, permanent results across blockchains makes it a go-to solution for building and scaling the dApp and smart contract ecosystem. With a library of standard code, an increasing number of second-layer blockchains, and growing applications, the EVM is key to Web3 development.

Examples of EVM-Compatible Blockchains

Binance Smart Chain (BSC)

Binance Smart Chain is built to be compatible with Ethereum, but it uses a different consensus algorithm called Proof of Staked Authority (PoSA) instead of Ethereum’s Proof of Work (PoW). This allows BSC to process transactions faster and more efficiently. The network supports smart contracts and is compatible with Ethereum-based apps and tokens.

For example, if you send USDT from the Ethereum network to a BEP-20 address (BSC's token standard), the recipient can still receive it, as long as they have a compatible wallet like MetaMask. They just need to add the BSC network to their wallet.

Avalanche

In Avalanche, each blockchain operates as a standalone instance of a virtual machine, like the EVM or WASM (WebAssembly). These blockchains are called subnets, each with its own validators. Thanks to its connection with Ethereum, Avalanche supports the transfer of ERC-20 and ERC-721 tokens, making it easy for assets to move between the two networks.

Polygon (Matic)

Polygon is closely tied to Ethereum, leveraging its infrastructure to build a scalable solution. It’s known as a Layer 2 network, meaning it helps Ethereum handle more transactions at a lower cost by taking some of the load off the main network. This makes it easier for developers to build Ethereum-compatible blockchains that can communicate with each other.

Polygon helps solve problems like network congestion, high transaction fees, and limited speed—issues that have made it difficult for Ethereum to scale as more people use it.

Fantom

Fantom is a blockchain that uses a unique consensus mechanism called Lachesis, which is based on the Directed Acyclic Graph (DAG) algorithm. This enables fast transactions with low latency. Fantom's architecture also makes it highly scalable, handling tasks more efficiently by splitting them across layers in the network.

Like many other blockchains, Fantom supports smart contracts written in Solidity, meaning it’s compatible with Ethereum and allows developers to easily migrate their apps.

Arbitrum

Arbitrum is a Layer 2 solution for Ethereum, designed to make Ethereum faster and more efficient. It uses optimistic rollups, a method that groups transactions together and processes them off the main Ethereum chain. All final validation is still done on Ethereum, so Arbitrum benefits from Ethereum's security.

This setup allows Arbitrum to offer high throughput and scalability, making it a great choice for developers who need fast transaction speeds without sacrificing security.

Differences Between EVM-Compatible and Non-Compatible Blockchains

Not all blockchains are EVM-compatible. Solana is one such example, offering high-speed and scalable solutions for dApps and crypto projects. Its biggest advantages are its speed and scalability, thanks to a unique combination of the Proof of History (PoH) and Proof of Stake (PoS) algorithms. This allows Solana to process transactions much faster than many other blockchains, including Ethereum.

However, Solana faces criticism for being somewhat centralized. Becoming a validator on Solana requires significant computing power, so only a small group can participate, raising concerns about decentralization. Additionally, the network has experienced frequent outages, and services like DeFi Safety have rated Solana poorly for its node infrastructure, block validation, and occasional censorship by validators.

Another non-EVM-compatible blockchain is Algorand, which uses a consensus mechanism called Pure Proof of Stake (PPoS). Unlike Ethereum’s PoW, which consumes a lot of energy, PPoS allows Algorand to achieve consensus with minimal energy use. Every holder of ALGO tokens can participate in validating transactions, making the network more decentralized and secure.

PPoS works by selecting participants at random to create new blocks, with the chance of being selected proportional to the amount of ALGO held. This system ensures security and fairness, even when some nodes might be malicious. It’s also protected against attacks like Sybil attacks by requiring a minimum ALGO stake to participate.

Despite its technical strengths, Algorand may face regulatory challenges in the future, especially as it becomes more competitive with traditional payment systems like VISA and Mastercard. And while Algorand has potential, Ethereum’s status as the pioneer in dApp development gives it a lasting edge.

How EVM Compatibility Supports Cross-Chain Development

Cross-chain solutions like bridges help transfer tokens between different blockchains. Blockchains often function as isolated systems with their own rules, so early developers didn’t focus much on making them compatible with one another. But as more projects emerged, interoperability became crucial.

A bridge typically works with smart contracts and oracle services that monitor transactions. Instead of moving tokens directly between blockchains, a bridge locks tokens in one network and mints new ones in another. This ensures that the transfer is secure and verified cryptographically.

Ethereum, with its vast user base and active development community, plays a central role in cross-chain solutions. Most bridges allow Ethereum users to move ERC-20 tokens to other networks, including both EVM-compatible blockchains (like Binance Smart Chain and Avalanche) and non-EVM-compatible ones (like Solana).

For EVM-compatible networks, transferring assets is straightforward using wallets like MetaMask. For non-EVM networks like Solana, it’s a bit more complex, requiring users to connect wallets compatible with both chains, such as MetaMask for Ethereum and Phantom for Solana.

Layer 2 (L2) solutions, like Optimism and Arbitrum, help Ethereum scale by processing transactions off the main chain, making them faster and cheaper. These Optimistic Rollups rely on Ethereum’s main network for security but handle transactions independently, with billions of dollars locked in DeFi protocols like Uniswap and Sushi.

One popular protocol for moving tokens from Layer 1 (L1) Ethereum to L2 is the Arbitrum One Bridge. However, withdrawing funds back to Ethereum’s main network can take up to seven days, which is a drawback of the Optimistic Rollups model. Other similar bridges include xPollinate, Hop.Exchange, Synapse Bridge, and AnySwap.

Challenges

Despite its many benefits, developers need to be aware of certain limitations when working with the EVM. The most significant issue is the high transaction costs, which fluctuate based on the complexity of the contract and the network’s congestion. These costs, known as gas fees, are paid in ETH and can impact the viability of projects, especially when contracts require a lot of computational power.

Another challenge is that the Solidity programming language, which is most commonly used for EVM, requires a strong skill set. Poorly written code or unnecessary computations can lead to higher fees, making the project more expensive to run. While developers can use other languages, they must ensure that there are no inefficiencies, as the EVM will still compile them and charge for any extra computations.

Updating smart contracts is possible but comes with security risks, as creating a temporary contract to point to the original can introduce vulnerabilities.

The EVM is designed with security in mind to prevent harmful code execution, but bugs or errors in smart contract programming can still be exploited by attackers. Additionally, the Ethereum network has struggled with high transaction fees, storage costs, and scalability issues, leading to congestion. However, solutions like sidechains and Layer 2 networks are being developed to address these problems.

Conclusion

The Ethereum Virtual Machine (EVM) is the backbone of Ethereum's ecosystem, responsible for running smart contract scripts. It allows developers to write smart contracts using programming languages like Solidity, which are then converted into bytecode that the EVM can process. The EVM manages the execution of these contracts and keeps track of the blockchain’s state, including account balances and smart contract data. It validates and processes every transaction on the network, ensuring everything is executed accurately.

This virtual environment enables developers to build decentralized applications (dApps) that automate complex tasks without needing intermediaries. The EVM is crucial for creating and deploying smart contracts that perform a wide range of operations, making it one of the most powerful tools in blockchain development.

As the blockchain world evolves, EVM-compatible blockchains are becoming increasingly popular. These blockchains build on the technology of Ethereum, maintaining compatibility while offering improvements like faster speeds and lower costs. This trend opens up new opportunities for developers and users, combining a familiar development environment with exciting new features.