What is EVM? Will the EVM Blockchain empire keep its unique position forever?
What is EVM? What are the advantages & risks of EVM Blockchain and Non-EVM Blockchain? Where are the opportunities for Non-EVM Blockchains to develop?
In the crypto market, you have heard a lot about the concept of bridges between blockchains and they are responsible for moving your coins/tokens from one blockchain to another.
In this article, idolmeta.net will learn with you about EVM technology to help applications/products connect and develop on not one but many different blockchains.
And find out why many projects don’t use this technology to scale.
Will EVM have any influence on the development of blockchain? Brothers and sisters, let’s break down what are the advantages and disadvantages of EVM technology!
What is EVM?
EVM (Ethereum Virtual Machine) is an Ethereum virtual machine. It can be understood simply that EVMs will act as intermediaries in the execution of smart contracts (smart contracts) on the Ethereum network.
Each Ethereum node is equipped with its own EVM, which will ensure the security and decentralization of the network.
Mechanism of action of EVM
Like Software Developers must use IDEs (Integrated Development Environmen) used to write code and package applications. These IDEs then translate the code into a language the computer can understand.
Solidity to Bytecode
Normally, Ethereum smart contracts are written in Solidity programming language, so EVMs will play the role of translating code to bytecode.
Bytecode is like computer source code and in it will be stored opcodes (operation codes) so that the Ethereum network can directly understand and execute control commands.
What is EVM Blockchain?
EVM blockchains are Ethereum virtual machine compatible blockchains, which means that Ethereum smart contracts can be run on those blockchains.
In other words, with just a little adjustment, Dapps (decentralized applications) on Ethereum can be run on the EVM blockchain. Some examples of EVM blockchain are Fantom, Celo, Avax C-Chain, BSC,…
Total TVL of the DeFi market
Total TVL of Ethereum ecosystem
Because Ethereum is currently the leading ecosystem with hundreds of projects from large to small, with a total TVL of $158 billion, accounting for more than 65% of the DeFi market. This means that the Ethereum ecosystem is a very fertile land, many other blockchains want to be bridged there.
Before going to find out which blockchains are EVM compatible, let’s see if this benefits the users as well as the project development team.
Benefits for users
- Feeling of familiarity: If you have ever used the Dapps of the Ethereum network, you will surely get familiar with the products on the EVM blockchain very quickly. Simply because the developers will keep their interface and features intact.
- Solve gas fees and transaction speed: Currently, the Ethereum network is facing a lot of limitations of the platform such as too high transaction fees (especially up to $100 if the Ethereum network is congested, which happens). very often), or the transaction speed is very slow. These things directly affect your experience.
Moreover, the following blockchains will be more prominent in technology as well as partially solve the outstanding problems of Ethereum. More specifically, when EVM compatible, the scalability of these blockchains is further strengthened.
- More gadgets and new products: As these new blockchains have a technological advantage, new ideas will be implemented.
For example, dYdX is a derivatives exchange that was originally designed on the Ethereum network, but later deployed on the Starkware network and has been very successful in capturing the full share of the blockchain derivatives market.
Benefits for Developers & Project Teams
- Doesn’t take time to get used to: For developers, whether new or experienced, it will take a lot of time to study and get used to a new programming language. But now, with EVM technology, developers can “jump” between blockchains more easily.
- Brand identity: When the project team’s products are deployed on other blockchains, the interface can be kept the same or changed depending on the needs of the project. So instead of creating a completely new project, the team just needs a little tweaking to be able to deploy their Ethereum project on the EVM blockchain.
- Product will be replicated: Instead of being limited to a certain blockchain, the team’s product will be extended to other blockchains ⇒ Expanding influence and attracting many users.
Analysis of EVM Blockchain
As in the previous section, you have understood what EVM is and its benefits to the project and users. So what blockchain EVMs are there in the crypto market right now?
There are two types of EVM blockchains:
- Layer 2 solutions.
- The EVM blockchain runs independently.
Layer 2 solutions
At the present time there are many EVM blockchains. The most mentioned are layer 2 solutions for the Ethereum network, simply because they are built on the foundation of Ethereum, so it is easy to inherit the advantages and overcome the disadvantages.
Learn more about the characteristics of Layer 2: What is Layer 2 projects?
Layer 2 solutions on Ethereum
As you can see in the image above, there are all scaling solutions for Ethereum. However, I only mention the most outstanding projects and have had recent notable successes:
- Starkware: As mentioned in the previous example, the Derivatives dYdX platform builds on Starkware and has been very successful, although before that on Ethereum it didn’t get much attention. Thus, Starkware has made a name for itself in the crypto market.
- Arbitrum: There are many projects that choose this blockchain to expand their products, some prominent names can be mentioned such as Sushi, AnySwap, Synapse, etc. Most especially, Abracadabra and Curve Finance are doing business. leading the DeFi 2.0 trend.
It can be seen that the layer 2 of Ethereum has also had certain successes when projects on Ethereum can deploy their entire platform on top of those solution layers.
This also promotes the entire Ethereum ecosystem in general and layer 2 projects in particular.
See also: The rise of Layer 2 on Ethereum
The blockchain EVMs run independently
Unlike layer 2 projects on Ethereum, layer 1 blockchains build their own blockchain design and foundation, so there will definitely be differences. Examples of other blockchain EVMs such as Binance Smart Chain, Fantom, Avalanche, Harmony, Near Protocol,…
1. Binanace Smart Chain (BSC)
Binance Smart Chain is a prime example of a blockchain EVM that has enjoyed a lot of success with over $19 billion in TVL value, second only to Ethereum.
The BSC ecosystem has more than 900 DeFi applications, including more than 50 decentralized exchange projects (DEXs). And most successful with the DEX PancakeSwap project with more than $5 billion TVL.
However, more than 50 DEXs projects in the BSC ecosystem are almost either copies of each other or fork from other projects via EVM. This causes fragmentation of TVL and dilutes the ecosystem, not succinct, when users have too many similar products.
See also: Overview of Binance Smart Chain Ecosystem (BSC)
TVL by PancakeSwap
Initially Polygon was only considered a layer 2 solution of Ethereum, but now the Polygon network pays transaction fees with MATIC (the main token of the Polygon network), so it is considered a separate blockchain from Ethereum.
At the time of writing, Polygon has a TVL of more than 4.5 billion USD, showing a very rapid growth in both quantity and quality of new projects.
Typically the NFT marketplace OpenSea project. This project is developed on Ethereum and has been very successful, with volume in August 2021 reaching nearly $3.5 billion and on Polygon with more than $50 million.
This shows that OpenSea has begun to expand its market share and care about the benefits of users when they use the Polygon network instead of Ethereum.
Let’s see if there is a mass shift from Ethereum to Polygon on Opensea in the near future.
Learn more: Polygon Ecosystem Overview
3. Near Protocol
On Near Protocol, the Aurora EVM project is considered the most important piece of the puzzle, because it makes Near Protocol compatible with EVM.
This means that Aurora can attract Dapps to the Near ecosystem. Especially in October, Aurora announced that major partners such as Sushi, Aave, Dodo, 1inch,… will develop their products on both Near Protocol.
⇒ Near Protocol is an example for EVM blockchain through the Aurora project. Therefore, we can see that EVM is still a trend and there is still a lot of room for development.
Learn more: Near Protocol ecosystem overview
One page of Aurora project. Source: Nearians
Through three examples of EVM blockchain, you can see the advantages of being EVM compatible. It can be summarized as follows:
- Attracting a lot of projects: At this point, it will be like a hundred rivers (Dapps) flowing into a sea (blockchain EVMs). As mentioned in the previous example, after Aurora finished integrating EVM into Near Protocol, a series of projects partnered with Aurora to be deployed on Near.
- Attract developers: They are the builders who will greatly contribute to building the product and developing the ecosystem in the long run.
- Take advantage of Ethereum’s Network Effect: You all know that Ethereum is the most ecosystem with thousands of large and small projects of all DeFi pieces as well as NFTs. Therefore, these projects landing on other blockchains will bring both users and liquidity, which will attract a lot of attention and buzz in the community.
Risks and Limitations of Blockchain EVMs
EVM blockchain has a lot of advantages and can be considered as an “inseparable” technology, but are there any limitations or disadvantages to this technology?
1. Reduce Security & Risk of Hacking
EVM is a technology that makes it possible for projects to deploy on many different blockchains. But when there is a cross-chain attack like Poly Network in August 2021, this causes “boss death” and the damage will be huge.
Latest hacks/exploits in 2021
2. Fragmented liquidity
If the project is present in many blockchains, liquidity will only exist in that blockchain and cannot be linked together. While there is a bridge to transfer tokens between blockchains, there are restrictions on fees, transfer times, and security risks.
DeFi applications with low liquidity will greatly affect the benefits and user experience.
For example, Sushi is available on 13 different blockchains, maybe you use Ethereum, Arbitrum or Polygon networks very well, your experiences will be affected on the remaining blockchains with relatively low TVL (below). 100 million dollars).
However, that may be the case for now, but TVL in these blockchains may increase in the future if more interest is received from users.
SushiSwap is running on 13 blockchains
3. Audit multiple smart contracts on multiple blockchains:
The cost of smart contract audits is getting more and more expensive, when projects want to build credibility, the more they understand the audit is a very necessary thing.
According to Ulam (the company that collaborates with the Algorand project), the price of an audit of smart contracts on Ethereum can range from $7500 to $45,000, in particular, some companies ask for up to $100,000. Imagine how big the audit cost will be for projects that have to be audited on multiple blockchains.
Several types of projects running on multiple EVM blockchains
In particular, you also often see that there will be two types of projects running directly on many EVM blockchain platforms:
1. Small projects
This is a product development project that is directly present on many blockchains, this is like a double-edged sword, maybe you find a hidden gem, or the project is just using this to create a vision dreamlike scenery is not possible.
Most obviously, the limitations of these projects are mainly limited resources that want to expand to many blockchains at the same time, leading to the quality of the product can be greatly affected.
As for the advantage, it is mainly in terms of marketing when it proves the level of the team as well as the ambition of the whole team, and the product reaches a larger set of users.
TVL of Eleven Finance project
Example: The Eleven Finance yield farming project has been mainnet since the end of September 2021 and is available in 5 different EVM blockchains (BSC, OKExChain, Polygon, Avalanche, Fantom). You can see that the project’s TVL does not have a strong growth.
ELE is the main token of the Eleven Finance project and has a market cap of only about $3 million and FDV is at $9 million. This shows that the project does not get much value for the ELE token.
Eleven Finance chooses the mainnet direction on many EVM blockchains to easily expand the project. But looking at the indicators shows that may be underperforming. However, in the early stages of a project, it is difficult to predict whether it will succeed or not. So, we will continue to follow the project in the future.
2. Got a foothold in a blockchain
These projects already have products that match user needs and are accepted. At this time, deploying good products to other projects will have many advantages:
- Good product and user support.
- Abundant resources when successful.
The most recent example is that Aave (the No. 1 TVL Lending platform on Ethereum) has landed on the Avalanche blockchain (with EVM compatibility in C-Chain). Immediately, Aave attracted $1 billion in TVL value on its first day.
In addition to the fact that Aave is supported by the Avalanche Rush program (incentive program of the Avalanche system), Aave is currently the No. 1 in terms of TVL in the Avalanche ecosystem. This makes native projects on Avalanche inferior to giant Aave.
Top projects with the highest TVL on Avalanche
Currently, new blockchains are in the process of attracting users and projects to their ecosystem. Therefore, the market in these blockchains is still very new and the number of TVLs is still not much.
But you can predict what will happen when money flows to these blockchains.
Therefore, the trend of being present in many blockchains (multi-chain) is an inevitable thing when the new generation blockchains have so many advantages compared to the old blockchain.
What is Non-EVM Blockchain?
In sharp contrast to the EVM blockchain, non-EVM blockchains are Blockchains that are not compatible with EVM. There are non-EVM blockchains such as Cardano, Solana, Algorand, Terra, Avalanche X-Chain,…
The main feature of non-EVM blockchains is that they use a different smart contracts programming language than Solidity on Ethereum, such as:
- Cardano uses Haskell/Plutus.
- Solana uses Rust/C/C++.
- Terra uses Rust.
- Algorand uses TEAL (Transaction Execution Approval Language).
As you can see, it will be very difficult for projects on Ethereum to be on the non-EVM blockchain. If they want, projects have to rebuild from scratch and code in smart contracts language for each blockchain, which no project wants to do.
Advantages and Limitations
Because the main feature of non-EVM blockchains is to use different smart contract programming languages. So the main advantages and disadvantages will revolve around this.
- Advantage: Non-EVM blockchains will have their own developer community and they will be prioritized by programs to promote the development of the whole ecosystem. The products in the ecosystem will now come from this developer community.
- Limitations: The difficult question of non-EVM blockchains is how to build a strong developer community. Since they are the main builder of the entire ecosystem, each non-EVM blockchain will have a different strategy and development direction.
The next part I want to give a specific example of a non-EVM blockchain with a very different direction is the Solana project.
What makes Solana successful?
Solana is a project that is in the top 6 in the blockchain market, although it does not integrate EVM. So is EVM an important key to blockchain development?
Since the beginning of 2021, Solana’s ecosystem has grown at an impressive rate, even with overvalued projects and the price of the token is experiencing very deep correction waves.
Currently, the Solana ecosystem has many bridge projects. Typically, there are two projects Wormhole and Allbridge, which play the role of transferring tokens between blockchains (Ethereum, Terra, BSC, …) and Solana. However, these bridges are only for transferring tokens between blockchains, and the Solana blockchain does not yet fully support EVM.
Read more: Overview of Solana ecosystem
To realize an EVM-compatible future, Solana is partnering with Neon Labs to help the Solana blockchain attract Dapps from other blockchains. Projects on Ethereum can write smart contracts on the Neon platform to connect with Solana.
Projects running on Solana
Solana’s plan from the beginning was to create a private and self-developed ecosystem, instead of using EVM to attract the project and other Ethereum-based developers from outside.
Projects running on Solana
As you can see, DeFi on Solana is growing very strongly with more than $13 billion in TVL value, led by Saber with more than 15% dominance. In the above list, there are 26 projects, but only 2/26 of those projects are present in other blockchains and are not in the top 10.
⇒ This shows the “inferior” to projects that only focus on Solana.
The minus point of the project in the Solana ecosystem is that there is no really good product like other blockchains. Despite having all the pieces of the DeFi puzzle, the projects in Solana still have not been optimized in terms of products or attracted much value to the project. Typically, the phenomenon of projects with high TVL but the token price is not commensurate.
In addition to the above pluses and minuses, I will give some of the things that Solana is doing very well to serve the project development community.
Smart contract programming language
First, it must be mentioned that Solana’s smart contract programming language is Rust, C and C++, it acts as a moat Solana created to go in the direction that the Solana project has created and separate the ecosystem from Ethereum. .
Basically, Rust / C / C ++ has a very large community, especially every programmer has coded these programming languages. Furthermore, developers who have decided to learn Rust to develop on Solana and succeed they will stay longer with the ecosystem.
Solana hackathon – Contest for developers
Because of applying Rush/C/C++ programming language to write smart contracts but not Solidity, Solana organized Hackathon contests to attract developers to the ecosystem.
Since the beginning of 2021, Solana has organized many hackathons (competitions for project programmers) to find and award prizes to the most promising and potential projects. Recently, Solana Season was held in June, with a total of more than 13,000 programmers participating and more than 350 projects.
Going on is the Ignition Hackathon (A global Solana Hackathon) event with a total prize pool of up to $5 million. The results of the contest will be announced in October. Coin98 Insights will update you as soon as the results are announced.
This shows the attraction of Solana ecosystem as well as Solana’s interest in programmers. Because they are the main contributors to the development of the entire ecosystem.
⇒ Solana is visioning to develop good and quality products first. And then open to receive projects from EVM blockchain, to avoid the case that the ecosystem will be fragmented and diluted because there are many forks.
Ultimately, Ethereum developers expect Solana to integrate EVM, because it is a fertile ground with adequate infrastructure. Moreover, the Network Effect of Ethereum and Solana are both very strong with large communities and quality backers.
Opportunities of non-EVM blockchain projects
The opportunity here is for projects that focus on developing on a foundation blockchain to achieve success first, and then deploy on other blockchains.
Lessons from very successful projects on Ethereum like (Aave, Sushi, Curve, etc.), but at the time when smart contracts started appearing, Ethereum was the best choice.
Currently, Solana as well as other new generation blockchains such as Cardano, Algorand, Terra, Flow, … are platforms with outstanding technology and great potential to deploy Dapps.
So what are the chances of projects on non-EVM blockchain?
Pay attention to the stage of a foundation blockchain, as each blockchain will have different strategies and plans to promote the development of the whole system.
Maybe initially focus on projects in the ecosystem, or prioritize projects via EVM.
⇒ Focus on a non-EVM blockchain for more chances of success in that ecosystem.
At this point, the project will go ahead and capture the market share of the entire ecosystem before other projects land through EVM.
Projects on Ethereum are looking to become multi-chain and run directly on those blockchains. The necessary condition of these blockchains is to be EVM compatible, while there are many non-EVM blockchains.
In the market there are multi-chain and cross-chain products such as Coin98 Wallet, with a wide range of products that support both EVM and non-EVM blockchain.
⇒ Focus on a layer to solve problems in that layer.
It can be said that Sushi is a very successful project on Ethereum with a lot of features and is available on 13 different blockchains. In essence, Sushi is already multi-chain, but not every blockchain user can use all the features of Sushi.
For example, using Sushi on the Binance Smart Chain (BSC) network, you will not be able to use the limit order feature on Sushi. This is just one example of the limited features of projects running on various blockchain platforms.
⇒ Focusing on the right product for users and markets on a blockchain.
The risks and limitations of EVM blockchain are mentioned in the previous section such as security, possibility of hacking, fragmented liquidity, scattered resources, and expensive audit costs, etc.
⇒ Focus on a blockchain and build products on top of that blockchain.
Therefore, when projects focus on a blockchain, there will be many advantages and thereby the probability of success will be higher than having everything scattered and becoming complicated.
EVM blockchains will benefit from Ethereum’s existing Network Effect, and it is highly likely that non-EVM blockchains will be compatible with this technology in the not too distant future.
Here are the five main points of the article:
- EVM blockchain receives a lot of attention from the community and is a springboard for the development of the entire ecosystem.
- As for the non-EVM blockchains, the future is highly likely to be compatible. This depends on the strategy of the blockchain project development team.
- However, like a bridge between blockchains, EVM always comes with risks, limitations and needs a lot of work to improve overnight.
- Solana is a project with a different direction but also full of potential when applying a popular programming language to write smart contracts. Moreover, Solana focuses on developing its own ecosystem.
- Projects that focus on developing on an ecosystem will have more chances to succeed.
Projects running on only one blockchain will be competed by projects from other blockchains passing through the EVM.
However, it does not mean that projects running only on one blockchain will be inferior to projects from other ecosystems. This depends on the development strategy of each blockchain.
Hopefully, the article of idolmeta.net helps you to have basic information about EVM and provides perspectives around this technology, from which you can find investment opportunities.