SEC: INTRODUCTION TO BLOCKCHAIN
NAME: AMAN KUMAR
ROLL NO: 0722013
COURSE: B.A. (HONS.) POLITICAL SCIENCE
TITLE OF THE PROJECT: The Ethereum Virtual Machine (EVM)
Contents
1. Abstract
2. Introduction to Ethereum
2.1 Key Features of Ethereum
3. Understanding the Ethereum Virtual Machine (EVM)
3.1 Core Characteristics
3.2 Literature Review
4. Architecture and Working of the EVM
4.1 Components of EVM Workflow
4.2 Execution Environment
5. Features of the Ethereum Virtual Machine
5.1 Turing Completeness
5.2 Sandboxed Execution
5.3 Gas Mechanism
6. Role of EVM in the Blockchain Ecosystem
6.1 Standardization
6.2 Security and Trustless Execution
6.3 Enabling the dApp Ecosystem
7. Challenges Faced by the EVM
7.1 Scalability Constraints
7.2 Computational and Storage Limits
7.3 Emergence of Competitive VMs
8. Gas Economics and Execution Model
8.1 Gas Fee Structure
8.2 Gas and Smart Contracts
9. Future of the EVM: Ethereum 2.0 and Beyond
9.1 Ethereum 2.0 Features
9.2 Layer 2 Scaling Solutions
9.3 EVM-Compatible Blockchains
10.The EVM’s Broader Impact
10.1 Democratizing Finance and Technology
10.2 Redefining Trust
10.3 Shaping the Future of Web3
11.Conclusion
12.References
ETHEREUM VIRTUAL MACHINE (EVM)
Title: The Ethereum Virtual Machine (EVM): Architecture, Functionality,
Challenges, and the Road Ahead
Abstract
The Ethereum Virtual Machine (EVM) is at the heart of the Ethereum blockchain and
plays an irreplaceable role in the execution of smart contracts and decentralized
applications (dApps). This study examines the technical, functional, and theoretical
underpinnings of the EVM. It discusses the development of Ethereum, the
organization and mechanics of the EVM, and its influence on the wider blockchain
community. In addition, the paper conducts a critical evaluation of EVM's
shortcomings including scalability, performance bottlenecks, and the development of
EVM-compatible alternatives. Lastly, it explores the future roadmap through
Ethereum 2.0 and Layer 2 solutions, laying the groundwork for a stronger, more
efficient, and scalable decentralized future.
1. Introduction to Ethereum
Ethereum was conceptualized in the latter part of 2013 and development kicked off
in early 2014, with the network launching on July 30, 2015. Ethereum was designed
not to be just a cryptocurrency. Its architecture made it possible for developers to
construct decentralized applications using its blockchain.
Ethereum brought the idea of smart contracts—self-executing contracts whose terms
are written in code. Such contracts execute on the Ethereum blockchain, and their
operation is controlled by a decentralized consensus protocol, eliminating the need
for middlemen.
1.1 Key Features of Ethereum
● Smart Contracts: Code-based agreements that execute automatically when
predetermined conditions are met.
● DApps (Decentralized Applications): Applications that run on a
decentralized network, utilizing smart contracts to function.
● Ether (ETH): Ethereum’s native cryptocurrency, used for transaction fees and
computational services.
● Turing Completeness: Ethereum can run any computation, given enough
time and memory.
Ethereum's novelty lies in its programmable nature, which allows it to serve as a
platform for decentralized innovation. At the heart of this capability is the Ethereum
Virtual Machine (EVM).
2. Understanding the Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) can be considered as the decentralized
computer that developers interact with when deploying and executing smart
contracts on the Ethereum blockchain. It is a computation engine, or virtual machine,
that enables the deployment and execution of code in a secure and deterministic
manner.
2.1 Core Characteristics
● Global Virtual Computer: The EVM is replicated on every Ethereum node,
ensuring consensus and consistency.
● Sandboxed Execution: Each smart contract runs in an isolated environment,
separate from the executing node's hardware and other contracts.
● Bytecode Execution: Smart contracts are compiled into EVM bytecode,
which the EVM interprets and executes.
● Trustless Processing: Transactions are executed in a trustless and verifiable
manner, removing the need for centralized control.
The EVM executes code exactly as programmed and ensures that the same input
will always result in the same output, regardless of which node performs the
computation.
Literature Review
The EVM was conceptualized in Ethereum’s whitepaper by Vitalik Buterin (2013),
wherein it was described as a Turing-complete virtual machine designed to execute
smart contracts autonomously on the Ethereum blockchain.
Buterin, V. (2013). Ethereum Whitepaper. - This foundational document outlines the
motivation behind Ethereum, defining the EVM as a distributed global computer that
executes smart contracts securely and deterministically.
Wood, G. (2014). Ethereum: A secure decentralised generalised transaction ledger.
Yellow Paper. - Wood’s yellow paper offers a formal specification of the EVM’s
design, providing detailed insights into its stack-based architecture, gas mechanism,
and instruction set. This remains a canonical reference for developers and
researchers.
The EVM operates on a stack-based architecture and uses gas to meter
computation costs, preventing infinite loops and denial-of-service attacks. Each
Ethereum node runs the EVM and ensures that smart contracts behave the same
across the network.
Antonopoulos, A. M., & Wood, G. (2018). Mastering Ethereum. O’Reilly Media.
This book provides a practical understanding of the EVM's bytecode execution and
how smart contracts are compiled, deployed, and interact with decentralized
applications.
Luu, L. et al. (2016). "Making Smart Contracts Smarter." ACM CCS.
This paper explores EVM security vulnerabilities, highlighting how poorly written
contracts could lead to exploits. It introduced tools like Oyente to analyze contract
code for flaws before deployment.
3. Architecture and Working of the EVM
3.1 🧩 Components of EVM Workflow
The Ethereum Virtual Machine (EVM) is the runtime environment for executing smart
contracts on the Ethereum blockchain. It acts like a decentralized computer that
executes code exactly as programmed, without downtime, fraud, or third-party
interference. The EVM workflow consists of several key components:
1. Smart Contracts
● Definition: Smart contracts are self-executing programs with the terms of the
agreement directly written into code. They are stored and run on the
blockchain.
● Programming Language:
○ Most smart contracts on Ethereum are written in Solidity, a high-level,
contract-oriented programming language.
○ Other languages include Vyper, Yul, and Fe (experimental).
● Features:
○ Deterministic: Same input always gives the same output.
○ Immutable: Once deployed, contracts cannot be changed.
○ Transparent: Anyone can inspect the contract code on the blockchain.
2. Compilation
● Purpose: The human-readable smart contract code must be transformed into
a format the EVM can understand and execute.
● Tools:
○ The most commonly used compiler is Solc (Solidity Compiler).
○ It converts Solidity code into EVM Bytecode and Application Binary
Interface (ABI).
● Outputs:
○ EVM Bytecode: Executable code that the EVM runs.
○ ABI: Defines the interface for interaction with the contract (e.g.,
functions, parameters).
3. EVM Bytecode
● What It Is:
○ A low-level, stack-based binary format that represents the smart
contract's logic.
○ Think of it as machine code, but for the EVM
● Why It Matters:
○ Bytecode is platform-agnostic and deterministic, ensuring consistent
behaviour across all nodes.
○ Every Ethereum node can execute the same bytecode and reach the
same result, which is essential for consensus.
4. Execution
● Environment: The EVM runs inside a sandboxed environment, isolated from
the host system to prevent unauthorised access or changes.
● Process:
1. Deployment: Once compiled, the bytecode is deployed on the
blockchain as a smart contract.
2. Triggering: Smart contracts are triggered by transactions (sent by users
or other contracts).
3. Execution:
■ The EVM executes the bytecode instruction-by-instruction,
updating the blockchain’s state based on logic.
■ Gas is consumed for each instruction to limit resource usage
and prevent abuse.
4. State Update:
■ The EVM alters the global state (account balances, contract
storage, etc.) based on the outcome of the execution.
■ All nodes apply the same state changes to maintain consensus.
Summary of Workflow
1. Write Smart Contract → in Solidity or another language.
2. Compile → into EVM bytecode using Solidity compiler (Solc).
3. Deploy Bytecode → onto the blockchain.
4. Execute Bytecode → via EVM when transactions call the contract.
5. Update State → blockchain data is updated if execution is valid and
succeeds.
Importance of EVM Workflow
● Interoperability: The standardized bytecode format ensures that smart
contracts can be executed identically across all Ethereum nodes.
● Security: Sandboxed execution prevents malicious code from affecting the
host machine.
● Determinism: Guarantees that contract execution results are the same on
every node, a core requirement for blockchain consensus.
3.2 Execution Environment
The EVM runs on every Ethereum node and maintains:
● A stack to hold intermediate values.
● A memory array to store temporary values.
● A storage system for permanent data linked to smart contracts.
Each contract execution reads from and writes to this environment, with strict gas
constraints to ensure computational fairness and prevent abuse.
4. Features of the Ethereum Virtual Machine
4.1 Turing Completeness
Turing completeness means the EVM can perform any computation, provided it has
sufficient gas and memory. This allows for highly flexible and powerful smart
contracts, capable of implementing various business logic.
4.2 Sandboxed Execution
The EVM provides a completely isolated execution environment. Smart contracts
cannot:
● Access file systems or network of host machines.
● Interact with contracts outside their scope unless explicitly called.
● Manipulate system-level processes.
This isolation improves security and integrity.
4.3 Gas Mechanism
Gas is Ethereum’s metering unit that measures the computational work required for
operations.
● Transaction Fee: Gas must be paid by users for operations.
● Abuse Protection: Prevents denial-of-service attacks and infinite loops.
● Efficiency: Encourages optimization in contract design.
Smart contract execution halts if it runs out of gas, ensuring faulty contracts don’t
clog the network.
5. Role of EVM in the Blockchain Ecosystem
The EVM acts as a standardized execution model across the Ethereum ecosystem,
making it central to the blockchain’s operation.
5.1 Standardization
Every Ethereum node relies on the EVM for interpreting and executing transactions,
which ensures network-wide consistency.
5.2 Security and Trustless Execution
Smart contracts are immutable once deployed. They run exactly as programmed,
eliminating the possibility of tampering or external influence.
5.3 Enabling the dApp Ecosystem
EVM powers:
● DeFi (Decentralised Finance): Applications like Uniswap, Aave, and
Compound.
● NFT Platforms: Like OpenSea and Rarible.
DAOS: Decentralised organisations governed by smart contracts.
Ethereum Virtual Machine (EVM) is the core engine that makes it possible for smart
contracts to be executed on the Ethereum network. Such smart
contracts—autonomous pieces of code—underlie decentralized applications
(dApps). The EVM makes sure such contracts run in a safe, predictable, and
deterministic environment, enabling developers to create trustless systems that do
not need intermediaries.
Perhaps the greatest impact of the EVM is in DeFi space. Uniswap, Aave, and
Compound are all utilizing EVM-based smart contracts to provide services such as
token swapping, borrowing, and lending—without needing the involvement of
conventional banks or brokers. This brings financial services to anyone in the world
with access to the internet, facilitating a more inclusive global economy.
Within the space of Non-Fungible Tokens (NFTs), ecosystems such as OpenSea and
Rarible are built on Ethereum, where users can mint, purchase, and exchange digital
items that are provably one-of-a-kind and owned on-chain. The EVM mandates the
rules regarding ownership, royalties, and transferability, creating trust and
transparency.
Finally, DAOs are also another innovation fueled by the EVM. DAOs are
organizations that function through rules programmed into smart contracts so that
communities can make decisions together without the need for centralized
management. Smart contracts manage everything from treasury to governance
proposals, all run on the EVM.
The EVM is the infrastructure that makes such innovations possible through its
secure and deterministic execution environment.
6. Challenges Faced by the EVM
6.1 Scalability Constraints
The Ethereum network can currently process only about 15-30 transactions per
second (TPS), leading to network congestion and high gas fees during peak usage.
6.2 Computational and Storage Limits
To ensure network-wide execution remains feasible, the EVM imposes:
● Strict memory limitations.
● Limited stack depth.
● Gas limits on transactions.
These constraints make it challenging to implement data-intensive applications.
6.3 Emergence of Competitive VMs
Several next-generation blockchains have introduced more efficient
alternatives:
● Solana's Sealevel: Parallel processing engine.
● Polkadot's Substrate VM: Uses WebAssembly.
● NEAR Protocol: Shard-based architecture.
These offer greater throughput and lower latency, posing serious competition to the
EVM.
7. Gas Economics and Execution Model
7.1 Gas Fee Structure
● Base Fee: Determined algorithmically, adjusts based on network congestion.
● Tip: Optional fee given to miners/validators to prioritize transactions.
● Gas Limit: Maximum amount of gas the user is willing to spend.
7.2 Gas and Smart Contracts
● Gas ensures that contracts are written efficiently.
● Prevents malicious behaviour by requiring payment for computation.
Example: A contract that performs a loop will consume more gas, discouraging
inefficient or risky designs.
8. Future of the EVM: Ethereum 2.0 and Beyond
The future of the Ethereum Virtual Machine (EVM) is inextricably linked to the
general development of Ethereum as a whole, particularly with the upgrade to
Ethereum 2.0, also referred to as Ethereum's consensus layer upgrade. Having
successfully made the switch from Proof of Work (PoW) to Proof of Stake (PoS) with
the Merge in 2022, Ethereum now uses much less energy and has laid the
foundation for higher scalability, security, and sustainability. This change does not
modify the EVM directly, but it makes its environment more optimal for operation by
allowing new scaling solutions like shard chains and layer 2 rollups that alleviate
congestion and improve throughput. The EVM in the future will be more modular and
extensible, making it possible to achieve cross-chain interoperability via
EVM-compatible blockchains like Avalanche, Polygon, and Binance Smart Chain. In
addition, new proposals such as EVM Object Format (EOF) are designed to enhance
smart contract performance, security, and upgradeability through rebasing the way
bytecode is deployed and run. Further out on the horizon, technologies such as
zero-knowledge (ZK) proofs and verifiable computation hold the potential to
transform how contracts get validated and executed, propelling the EVM toward
more privacy-preserving and less resource-intensive designs. In the end, as
Ethereum becomes a more scalable and inclusive platform, the EVM will continue to
be its programmable core—flexible, resilient, and at the heart of Web3's
decentralized future.
8.1 Ethereum 2.0 Features
● Shard Chains: Enable parallel processing, increasing throughput.
● PoS Consensus: Reduces energy consumption and increases security.
● eWASM: Future EVM replacement using WebAssembly for better
performance.
8.2 Layer 2 Scaling Solutions
Layer 2s handle transactions off-chain, settling final results on Ethereum. Popular
examples:
● Optimistic Rollups (Optimism, Arbitrum)
● ZK-Rollups (zkSync, StarkNet)
These solutions significantly reduce gas fees and increase TPS.
8.3 EVM-Compatible Blockchains
Chains like Binance Smart Chain and Avalanche have adopted EVM
compatibility to attract developers from Ethereum, offering:
● Lower gas fees
● Faster confirmation times
● Seamless migration of smart contracts
9. The EVM's Broader Impact
9.1 Democratizing Finance and Technology
The EVM has empowered users globally by providing tools to build decentralised
systems that are inclusive, transparent, and secure.
9.2 Redefining Trust
The traditional reliance on institutions is being replaced with trust in code. This
represents a fundamental shift in governance, commerce, and legal systems.
9.3 Shaping the Future of Web3
EVM continues to be a driving force behind Web3, facilitating:
● Decentralized identity
● Decentralized storage
● Tokenized ecosystems
The Ethereum Virtual Machine (EVM) remains an underlying driving force behind the
Web3 revolution through its support for such foundational innovations as
decentralized identity, decentralized storage, and tokenized ecosystems. By its
power to run smart contracts securely and trustlessly, the EVM allows users to own
their digital lives. In the context of decentralized identity (DID), the EVM enables
systems for individuals to control and verify their identities without depending on
central authorities. Identity verification, access control, and reputation systems can
be managed by smart contracts in a privacy-preserving way, making self-sovereign
identities possible. In the same way, the EVM enables decentralized storage through
allowing smart contract-based interoperability with peer-to-peer storage protocols
such as IPFS and Filecoin. This is done to ensure that information is dispersed,
tamper-proof, and available without having to rely on centralized servers, all with the
aim of fostering a censorship-free internet. Additionally, the EVM supports tokenized
ecosystems through the backing of popularly used token standards like ERC-20 for
fungible tokens and ERC-721 for NFTs. The tokens are the foundation for
decentralized finance (DeFi), digital art, gaming, and governance applications, with
programmable value and peer-to-peer transactions. Effectively, the EVM supplies the
computational framework and security architecture behind the decentralized
backbone of Web3, allowing people to engage, transact, and create within an
entirely open digital world.
10. Conclusion
Continuous Improvements
The Ethereum Virtual Machine has redefined what is possible in a decentralized
context. It has created an environment where innovation flourishes without
centralized control. While it faces challenges related to scalability and performance,
the roadmap laid out through Ethereum 2.0, Layer 2 solutions, and eWASM gives
hope for a more scalable and efficient future. As blockchain technology continues to
evolve, the EVM’s principles of trustless execution, decentralization, and innovation
will remain central to the Web3 revolution.
References
1. Buterin, V. (2014). Ethereum Whitepaper.
https://ethereum.org/en/whitepaper/
2. Wood, G. (2014). Ethereum Yellow Paper.
https://ethereum.github.io/yellowpaper/paper.pdf
3. Ethereum Foundation. (2023).
https://ethereum.org/en/developers/docs/evm/
4. Antonopoulos, A., & Wood, G. (2018). Mastering Ethereum. O’Reilly
Media.
5. ConsenSys. (2023).
https://consensys.net/blog/blockchain-explained/what-is-the-ethereum-v
irtual-machine-evm/
6. Solidity Documentation. https://docs.soliditylang.org
7. Binance Academy.
https://academy.binance.com/en/articles/what-is-the-evm
8. Vitalik Buterin’s Blog. https://vitalik.eth.limo
9. Chainlink Research. https://research.chain.link
10.https://komodoplatform.com/en/blog/what-is-ethereum-virtual-machine-e
vm/
11. WIKIPEDIA
12.https://medium.com/@eiki1212/what-is-evm-ethereum-virtual-machine-f3
8310130114
13.https://www.theknowledgeacademy.com/blog/what-is-ethereum-2-0/
14.https://www.geeksforgeeks.org/ethereum-gas-and-fees/
15.https://www.solulab.com/how-to-build-a-decentralized-web3-ecosystem/
