Ethereum Virtual Machine (EVM)

The Ethereum Virtual Machine (EVM) is a core component of the Ethereum network that serves as a decentralized, global computer for executing smart contracts 1 2. It is the runtime environment for smart contracts written in languages like Solidity, Vyper, and Yul 3 4.

Key Characteristics and Function

The EVM defines the rules for state changes on the Ethereum blockchain, ensuring that every node in the network processes the same transactions and arrives at the same result 5.

Smart Contract Execution: The EVM is responsible for executing the code of smart contracts 3.
Gas Fees: Transactions executed on EVM-based chains require a gas fee to cover the cost of the transaction 3 4. This fee is paid by the user in their wallet 4.
Programming Languages: Due to its feature parity with the Ethereum network, the EVM is compatible with any programming language executed in the Ethereum environment, with Solidity being the most prominent 3 4.

EVM Compatibility and Ecosystem

EVM compatibility is a significant factor in the smart contract platform landscape, as it allows other blockchains to support Ethereum-based smart contracts and benefit from Ethereum's network effects 1 2.

EVM Platforms

Platforms that are EVM-compatible support the Ethereum Virtual Machine, which generally allows for easier migration for developers already building on Ethereum 1. As of late 2021, top EVM platforms included 1:

Ethereum
Binance Smart Chain (BSC)
Polygon
Avalanche
Fantom
Arbitrum
Celo

EVM-based decentralized finance (DeFi) protocols have historically maintained dominance, contributing to approximately 80% of the total value locked (TVL) in the DeFi economy between August 2020 and July 2022 6.

Advantages and Disadvantages of EVM Platforms

EVM platforms offer specific trade-offs compared to non-EVM platforms 2:

Category	EVM Platforms (Advantages)	EVM Platforms (Disadvantages)
Ecosystem	Existing, educated user base 2	Easy capital rotation away from the platform (low switching costs) 2
Development	Existing decentralized applications (DApps) to inherit 2	Innovation constrained by the rules of the EVM 2
Interoperability	Easier interoperability with the Ethereum ecosystem, benefiting from network effects 2	Subject to the Ethereum roadmap 2
Maturity	Tend to be more established and mature 2

The EVM is predicted by some analyses to secure one dominant position in a potential duopoly of smart contract platforms 7.

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