When new chains were launched, some challenged the EVM concept, claiming superior technological advantage. Now many are racing to integrate EVM to maintain relevance in the multi-chain world. Another factor has been enterprises embracing Web3 and wanting interoperability, extensibility and security. For most enterprises, non-EVM chains are a non-starter.

The EVM standard

2021 saw the blockchain world spawning protocols faster than ever, but most were siloed. The emergence of EVM as a standard annoys many protocol architects but also creates an opportunity for them to drive connectivity and deliver faster growth in the future. Large players integrating EVM is a clear indication of it being an important weapon in the arsenal, making it hard to compete without it.

Importance of EVM

EVM drives interoperability, security and development efficiency, which are important if one must tap other chains to access its assets, liquidity, users or features. Interoperability creates ease of use and development, e.g., the same wallet public key address (same wallet too) can manage tokens, creating a superior user experience. Other benefits include moving funds, setting up liquidity pools outside of the main blockchain, portability of NFTs, etc., without development work. Even the same code with minimal to no modifications can be ported onto different blockchains, creating fault-tolerance, security and ease of switching at no cost — which is particularly appealing to large enterprises.

For enterprises, EVM compatibility is the #1 criterion when evaluating public blockchain use cases. EVM-compatible chains can quickly gain customers and drive early adoption while competing and partnering with several other chains in that ecosystem. For non-EVM chains that claim to be free of legacy baggage and are more innovative, these chains may have better chances in GameFi or payments, where multiple blockchains can operate without issues.

EVM-compliant systems grow faster

The on-chain project data indicates multifold action on EVM chains as compared to the non-EVM blockchains which are siloed. Developers want EVM compatibility to rapidly deploy on new chains and grow quickly. Almost every top-tier blockchain is already compliant or executing toward it.

EVM-compatible chains use the same token standard as ERC-20, making it easier to list them on multiple exchanges. Some exchanges charge higher fees for non-ERC-20 token listings

Pros and cons

As with everything else in this world, there are pros and cons to the EVM approach versus alternatives. The pros are connectivity to a broader ecosystem, developer efficiency, security, access to liquidity, enterprise compliance, lower costs, etc.

There are flip sides to being tied to the EVM approach as it further strengthens Ethereum and its tools at the expense of the new blockchain technology. There will also be no incentive to create unique protocol designs, differentiations or niches. One also must live with the constraints and rules of EVM.

Most of the Ethereum nodes dwell on AWS (Amazon Web Services) and can be considered centralized to an extent, creating operational dependency where projects must trust the service providers. This is something that goes against the ethos of Web3. Using EVM-based chains also requires a high degree of technical expertise and knowledge of coding. EVMs also lack natively upgradable smart contracts and multi-sig support, adding to a more complex technical posture.

Concluding thoughts

EVM is now becoming an enterprise standard and the connectivity tissue between blockchains. Even the most ardent detractors of EVM have now invested in compatibility as it is the new onramp channel for users, assets and liquidity, which adds developer experience, efficiency and lower costs. As more enterprises embark on Web3, EVM chains could continue to grow. Enterprises demand stability, scalability, interoperability and security — and right now, EVM-compatible projects are some of the ones providing that.

Nitin Kumar is the co-founder at zblocks and a recognized leader, author, former consulting partner and VC investor.

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

https://circle.cointelegraph.com/

The Ethereum virtual machine (EVM)—aka the CPU of Ethereum—has captured a large developer mindshare in recent years. At least two waves (2017 and 2020) of Ethereum killers launched themselves in the name of alternatives (non-EVM) and better technological solutions but did not drive meaningful adoption at scale.

In my experience working with 200 enterprises over the past few months, I've discovered some clear patterns that have emerged to make the enterprise case for EVM compatibility a requirement.

Speed, Efficiency And Network Effects

Developers can rapidly deploy smart contracts without rewriting code from scratch, creating speed-to-market appeal and efficiency. This attracts more developers and users to EVM-compatible chains, driving a network effect (i.e., Metcalfe's Law). The network effect has established the EVM ecosystem as the de facto standard to reach developers and users, which enterprises view as a distinct advantage.

Adoption And Amplification Friendliness

Some chains like 0x have lower network fees, faster transaction settlement and similar address formats. There are large and well-funded EVM-compatible chains with massive communities such as Binance Smart Chain, Avalanche, Fantom and Hedera, with supporting Layer 2 ecosystems like Arbitrum and Optimism adding to the strength of adoption around EVM-compatible chains. The Layer 2 ecosystems built on Ethereum have unlocked Reed's Law of network effects (exponential to Metcalfe's Law), with their own ecosystems growing at a more rapid rate than Ethereum itself. These phenomena are attractive to enterprises commencing their Web 2.0 to Web3 journeys.

Interoperability And Security

Using incompatible languages and non-EVM has created barriers for rival chains to communicate between blockchains or transfer assets without fragile bridges. Frequent hacks on bridges have been widely reported, and enterprises are unwilling to put themselves at risk. I've worked with multiple chief information security officers who have been very concerned about this issue. Many Layer 1 blockchains understand this and have supported EVM on their chains.

Leaders And Challengers

Other than Ethereum and its ecosystem (e.g., Polygon, Optimism, etc.), there are a few possible winners on the enterprise turf.

Hedera, with its EVM compatibility and enterprise-friendly packaging, can enable a lot of functionality to be consumed as a service, and its KYC'ed validators lead the pack. Avalanche has focused on EVM compatibility, scalability and low gas fees as well as going SOC2-compliant, creating an appeal for enterprises. There are some new challengers in Polygon, Near Protocol and Algorand, where one can see a lot of promise and fan following. However, it remains to be seen how they fare when tested at a massive enterprise-grade scale. Many other protocols have tall claims toward the enterprise but have not resulted in enterprise adoption and are far behind in their understanding of enterprise needs.

Concluding Thoughts

Ethereum may not technically be the best VM in town (it is old), but the network effects (Metcalfe's Law and Reed's Law)—coupled with dominant first-mover advantage—are hard to beat. As ETH 2.0 unfolds (slower pace of execution than many people want), EVM will also be upgraded to a newer version. Until then, however, enterprises will likely live with older technology rather than trade-off adoption, reach, amplification, interoperability, compliance and security.

I don't believe there is a compelling reason for enterprises or developers to deal with non-EVM. A quick search can reveal the magnitude of adoption differences between EVM and non-EVM chains. In the multi-chain future, enterprises will prefer to work with known technology with proven advantages, which should drive adoption as enterprises understand the risk that many non-EVM blockchains could likely not exist or languish in their current state.

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