What is Ethereum Virtual Machine and how does it work?

What is Ethereum Virtual Machine and how does it work?

Put simply, the Ethereum Virtual Machine (EVM) is the engine that powers the Ethereum network. EVMs boost the Ethereum blockchain and smart contracts by assisting the network to achieve user adoption and decentralization. In this article, we will discuss what is EVM and take a close look at how EVM works. We will also cover EVM-compatible blockchains and their use cases. Let’s dig in to understand EVM and how it forms the base for the Ethereum network. 

What is EVM?

The Ethereum Virtual Machine, or EVM, is a decentralized virtual environment that executes codes consistently and securely across all Ethereum nodes. EVM functions as the runtime environment for executing smart contracts and decentralized applications (dApps). The nodes run the EVM to execute smart contracts using ‘gas’ to measure the computational effort required for operations, ensuring efficient resource allocation and network security. 

At its core, the EVM is a Turing-complete, sandboxed execution environment. Turing completeness means it can theoretically perform any computation, making it a versatile platform for creating dApps. 

How does the Ethereum Virtual Machine work?

The EVM is a virtual machine or a cloud computer that executes scripts to implement transactions on the Ethereum network. 

EVM ensures access to the network nodes to execute the desired commands and create new tokens on the blockchain. Ethereum Virtual Machine serves as a platform for applications to be executed. Here is a step-by-step explanation of how EVM works:

  • The Ethereum network smart contracts. These contracts are computer codes that facilitate monetary transactions and the exchange of information. 
  • The smart contracts have predefined parameters set by their creators. The execution of the contract will depend on what happens or what doesn’t happen. 
  • EVM comes in between the Turing complete environment for the execution of scripts and smart contracts. 

In other words, anything that can be implemented with a computer can be run on EVM.

This is the visual representation of how EVM functions. 

Source: Ethereum.org

EVM-compatible blockchain

An EVM-compatible blockchain is a network compatible with the Ethereum Virtual Machine, the core engine that powers the Ethereum blockchain. The following are five popular EVM-compatible blockchains: 

1. Ethereum (ETH) 

The first and the largest EVM-compatible blockchain. Ethereum has an excellent community of developers and researchers working for its advancement. The Ethereum Roadmap starting with the Merge aims to lower transaction costs and increase the scalability of the network. 

2. Binance Smart Chain (BSC) 

BSC offers lower transaction costs and high throughput but is more centralized with only 21 validators. 

3. Avalanche (AVAX) 

Avalanche is a highly scalable EVM blockchain with fast traction time and low fees. Avalanche also has a growing community of developers. 

4. Polygon (MATIC) 

Polygon is a Layer 2 Ethereum scaling solution that reduces fees and increases transaction throughput. It has a strong integration with the Ethereum ecosystem. 

5. Fantom (FTM) 

Fantom is known for its high throughput, with a unique consensus mechanism. It also offers a flourishing DeFi ecosystem and cross-chain interoperability. 

Use cases of EVM 

EVM is what makes the Ethereum blockchain unique. Here are some key use cases of EVM (Ethereum Virtual Machine):

1. Smart Contract Execution 

Smart contracts are self-executing contracts with the terms of execution written in the contract code. EVM allows developers to create and execute smart contracts. 

2. Decentralized Applications (dApps)

Ethereum is a preferred platform for dApp development and EVM is the major contributor to Ethereum’s desirability. dApps can be created for various use cases such as gaming, social media, and finance. 

3. Token Creation

ERC-20 tokens, which became a standard for all Ethereum-based networks, can be created and managed using EVM. These tokens serve as utility tokens and gaming tokens. 

4. Non-Fungible Token (NFT) Minting

ERC-721, an Ethereum token standard, enables the creation of NFTs in the Ethereum ecosystem. These NFTs can be used for digital art, collectibles, in-app assets, etc. 

5. Decentralized Exchanges (DEXs)

Popular DEXs Uniswap and SushiSwap use EVM to deploy smart contacts that enable decentralized trading of ERC-20 tokens. 

EVM provides a secure and reliable platform for executing smart contracts, enabling the creation of a wide range of dApps and tokens on the Ethereum blockchain. Its compatibility with other blockchains allows developers to leverage the existing Ethereum ecosystem. 

Advantages and disadvantages of EVM

Ethereum Virtual Machine revolutionized the use of blockchains with its ability to execute smart contracts. While it has many advantages, it also has some drawbacks. Here are some of the pros and cons of EVM:

EVM Pros

  • Execution of code without risking data 

Developers and users can execute untrusted code without putting the data at risk as EVM computations occur in isolation, preventing malicious code from impacting the entire network.  

  • Running complex smart contracts

The sandbox nature of EVM means it executes complex smart contracts in isolation. This means developers do not have to worry about how complex smart contracts will interact with each other. 

  • Accurate processing

Smart contracts written on EVM have access to all stages of Ethereum since its inception. This enables deterministic processing with a higher degree of correctness. 

  • Distributed consensus

The Ethereum network allows distributed consensus. This means a user can run the program from their computer on the EVM using the computation power of several nodes in the system. 

EVM Cons

  • Data storage is expensive

A higher cost is involved in sorting the data on the blockchain, contrary to doing it off the chain.

  • High gas price

Transactions on the Ethereum blockchain require an execution fee. These fees are called ‘gas’ and are paid in ETH. The complexity of the transaction will determine the costs. Thus, difficult computations will be charged a higher fee. 

  • Requires technical expertise

Smart contracts and EVM require technical expertise as they can only be written in a coding language. 


The EVM’s ability to execute smart contracts and power dApps has reshaped how industries and applications use blockchain technology, paving the way for increased transparency, efficiency, and decentralization. As Ethereum transforms into a more scalable, cost-effective chain, EVM is at the forefront of the blockchain’s evolution into a robust and mature ecosystem.


What powers the Ethereum Virtual Machine?

The EVM is powered by gas generated during the execution of transactions.

What language does Ethereum Virtual Machine use?

EVM is a software that gives instructions to process transactions. Solidity is the programming language used to write smart contracts for Ethereum, which EVM executes in a different format.

Is the Ethereum Virtual Machine a state machine?

Yes, EVM is a state machine that enables smart contract deployment and execution in Ethereum’s decentralized ecosystem.

What is the architecture of an Ethereum Virtual Machine?

The EVM uses a stack-based architecture and a word size of 256 bits.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered investment/financial advice from CoinSwitch. Any action taken upon the information shall be at the user’s risk.

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