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EVM network effects: Why the EVM may be more important than Ethereum itself

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EVM's highly valuable developer network effects go beyond the Ethereum blockchain itself

Original title: "EVM network effect: Why EVM may be more important than Ethereum itself?" "

Original author: Nir & Krishna Nandakumar

Original compilation: Unitimes

Foreword: This article was co-authored by Nir and Krishna Nandakumar with contributions from Vernon Johnson, David Phelps, Carlos Diaz-Pedron, Tomer Ben-David and Jad Esber This article provides a lot of help.

EVM may be more important to the entire blockchain industry than the Ethereum blockchain itself important.

In fact, the well-known Ethereum is just an implementation of the Ethereum blockchain. On the other hand, the Ethereum Virtual Machine (EVM) is blockchain-based open-source software that allows developers to create decentralized applications. It is the global virtual computer that records the state of each smart contract stored and agreed upon by the Ethereum network. Solidity is its programming language.

EVM was the first software to provide developers with smart contract functionality and has grown into a thriving ecosystem, Its highly valuable developer network effects extend beyond the Ethereum blockchain itself. In fact, some well-known blockchains using EVM have their own token economy and consensus mechanism, completely independent of ETH tokens and ETH mining. Innovation, infrastructure, and user growth on other EVM chains can be seamlessly used by the Ethereum blockchain, and vice versa.

Network Effects Without a License Agreement

Network Effects are a phenomenon where users Or the addition of participants can increase the value of a good or service, sometimes exponentially. For example, the Internet is worth more to you if everyone is using it than if only a few people/organizations are using it. Social networking is another common example.

Open source software and ecosystems benefit from similar network effects: the more developers build or integrate on top of open source software, the more more valuable. But that's not all that OSS (Open Source Software) can benefit from. If most of the infrastructure and applications on top of the network are also open source, then the network effect will be multiplied.

This is why EVM network effects are so powerful: every user has permissionless access, every line of code is public Written, which increases the value of all EVM chains, no matter which network it is for. This also improves EVM defenses compared to other schemes.

EVM Compatibility

If the smart contract of a protocol can be run on the EVM implementation, then the protocol is compatible with the EVM. In practice, this means that contracts for the protocol must either be written in Solidity, or be able to compile their contract code into bytecode that can run on the EVM.

zkSync is a zero-knowledge protocol designed to reduce transaction costs and increase speed, which supports solidity smart contracts and requires no changes in most cases. Also, StarkNet - another roll-up, has a language called Cairo, which is currently not EVM compatible, but the team is working on building a compiler so that it can execute on the EVM, and has built another direction (EVM - > StarkNet) translator. Other examples of EVM-compatible/native blockchains and Layer 2 include Ethereum Classic, Polygon, BNB Chain, Optimism, Arbitrum, Gnosis Chain, Avalanche, and Celo. You can check out other EVM compatible chains on Chain List.

Take zkSync as an example, zkSync is a zero-knowledge protocol designed to reduce transaction costs and increase transaction speed. The protocol supports Solidity smart contracts and requires no changes in most cases. On the other hand, StarkNet (another ZK-Rollup network) has a native language called Cairo. The network is currently not EVM compatible, but the team is building a compiler so that it can execute on the EVM, and has built an EVM -> StarkNet translator. Examples of other EVM-compatible blockchains and L2 networks include Ethereum Classic, Polygon, BSC, Optimism, Arbitrum, Gnosis Chain, Avalanche, and Celo. You can check out other EVM compatible chains on Chain List:

https://chainlist.org/

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Why is composability important?

EVM can be seen as a "new generation" of JavaScript that has attracted billions of dollars in capital investment in a short period of time. It has a first-mover advantage, and all funds and resources dedicated to advancing new solutions for the EVM can be used and scaled permissionlessly. Therefore, building a new public chain or side chain on the EVM does not need to start from scratch.

It's worth noting that JavaScript is considered by some to be a bad programming language, but attempts to replace it (Dart) have failed, leaving it as Improvements to the transpiler (Typescript) did the trick. Its network effects are so strong that any breach of composability, regardless of the language's quality, renders attempts to replace it infeasible. The same may be true for the EVM.

For builders and operators, composability means they can take advantage of one or more of the following:

1. Rich metadata, identity system and social graph: Addresses are the same across EVM chains, which means that any new project or chain can leverage the same user/address Associated metadata to address cold-start issues, content provenance, add sybil-resistence, build social/interest graphs for each user, airdrop on cheaper chains, etc.

2. Thriving developer ecosystem: Community support on active platforms such as the Ethereum Stack Exchange and other Q&A sites for Ethereum users . Many of the top smart contract blockchain developer ecosystems are using the EVM.

3. Tools for Web3 Builders: Some tools include Gnosis Safe, Snapshot, WalletConnect (and most supported wallets) , Zerion, Metamask, and Etherscan. There are also many open source toolkits such as OpenZeppelin, Hardhat, and Foundry.

4. Interoperability: Cross-chain governance using snapshot strategy, stablecoins and base tokens (ETH, MATIC, etc.) Cross-layer transactions, the same address system, etc.

5. Optional: Developers who build on one chain or instance can migrate to a better chain or start their own chain. This is a huge advantage for developers who feel confident about the relatively new blockchain.

Tweet source: https://twitter.com/ TrustlessState/status/1511127294093320193

The case of using EVM

Except in Ethereum In addition to building on itself, traditional enterprises have seized the advantages of building on EVM. For example, JP Morgan built their enterprise blockchain on their own fork of Ethereum called Quorum. TikTok launched NFT on ImmutableX, the Ethereum NFT layer-2 scaling solution. 100 Thieves released their first NFT airdrop on Polygon, an Ethereum sidechain running the EVM.

Other blockchains are also trying to interoperate with Ethereum and build EVM implementations on their own chains. These include Solana (Neon), NEAR (Aurora), and Cosmos (Evmos).

Evidence of EVM Network Effect

1. Ethereum owns all blockchains to date The largest developer ecosystem in the world. According to Electric Capital’s 2021 developer report, Polygon and BSC (also an EVM chain) are ranked 6th and 7th respectively. In fact, at least 8 of the top 20 blockchain ecosystems are running EVMs.

2. Many chains have built EVM-compatible implementations on their own chains (such as Solana and Cosmos), but no one has built or built on Ethereum Calls for building contract compatibility with other chains (such as Move or the Cosmos SDK).

3. Looking at the top projects built on Ethereum, their migration time to non-EVM chains is several times longer than EVM chains. For example, Celo (an EVM-compatible L1 chain) benefited in the first days/weeks from the multi-purpose block explorer Etherscan, the wallet Metamask used by millions, and a robust and well-audited multi-signature solution (Gnosis Safe) main network. Chains like Solana or Cardano may not have trusted multi-signature solutions for years.

4. Some of the largest EVM blockchains are continuously applying Ethereum learnings in real-time. For example, Polygon (EVM-compatible L1) is already burning MATIC after implementing an almost identical proposal to Ethereum’s EIP-1559. Winning EVM blockchains will continue to leverage this strategy.

L2 EVM composability potential challenges of

Some Layer 2 networks are currently trying to convey the idea that they may soon break the equivalence with the EVM at some point characteristics to try out some features that only make sense on L2 or would take a long time for Ethereum L1 to integrate. In a sense, we may enter a world where the L2 EVM is implemented slightly differently and becomes a testing ground for new features of the EVM. This may break the deployability of 1-1 code at some point in the future.

Having said that, as long as the state between the layers remains composable, there is little chance of L2 subverting the equivalent value of the EVM, usually bridging data between chains , keep execution attributes to a minimum. And as long as an adapter can be written on the other end, and the state format makes sense between the two chains, minor implementation differences probably won't be a hindrance.

Non-EVM chains

What does this mean for competing chains and ecosystems? They're going to need big budgets and have to find ways to serve the EVM audience. The ecosystem model works if non-EVM projects can grow quickly and efficiently. Solana is one of the serious challengers, but despite spending a lot of money to catch up, adoption is still somewhat lacking.

Of course, there are many things that the EVM cannot do, and there will be some applications that can only be used outside the EVM for a long time, and will also be used for other VMs deliver value. It is worth noting that some unique projects have begun to choose different solutions than EVM, for example, Stepn is on Solana. This may be evidence that EVM is not a winner-take-all, and there will be many applications out there. It's worth mentioning that the same is true for JS, but every year the number of apps that can't be built in the browser with JS drops.

Cross-chain and Parachain

Cosmos, Polkadot and other blockchains adopt Composability-first approach wins over capable builders and users. While years behind the EVM ecosystem, the Cosmos SDK enjoys very similar network effects, but most composability is asynchronous, meaning it happens in multiple steps for various validations. As of now, Cosmos does not have the same address for cross-chain accounts, although this will change soon. CosmWasm is very new and the ecosystem lacks important mechanisms such as a robust oracle solution for DeFi. For example, JunoSwap (an AMM on the Juno chain) was launched months late, and the code was messy and incomplete.

Solutions like Celestia seem to take these network effects into account, allowing Ethereum and other EVM chains to act as a settlement layer. This preserves the composability of the EVM, but with more optionality and scalable security. This approach is likely to be the topic of discussion around L1 blockchains for years to come.

Conclusion

Developers and L1 competitors should seriously consider Great advantage of the build. In most cases, I expect the existing EVM chain or L2 to be sufficient for most needs, although they may require specific functionality that the EVM was not built for. The EVM is years ahead of its competing ecosystem, which will continue to increase adoption and network effects. However, ETH proponents need to prepare in advance for the possibility that other blockchains based on the EVM may not necessarily trigger demand for ETH, but instead take the majority of Ethereum’s market share.

**This article only represents the views of the original author and does not constitute any investment opinion or suggestion.