It’s becoming the archetypal crypto narrative: <insert year> will be the year where <insert blockchain project> really takes over Ethereum as the world’s most popular and valuable smart contract-friendly crypto platform.
As a narrative, for now, it has seemed far more similar to a piece of fiction than a prophecy – many very promising projects have come and gone; some even stayed. However, the most they’ve gained was a small bite out of ETH’s massive user base, and in fact, the competition has apparently pushed innovation within Ethereum forward at unprecedented speed – thus further cementing Vitalik Buterin’s brain child’s success.
But what makes Ethereum such a desirable environment to work in? The answer is not its price action or popularity (at least not just those), but its technical backbone – the Ethereum Virtual Machine (EVM).
EVM: An Industry Convention
The name ‘Virtual Machine’ can be somewhat misleading to the uninitiated, but the concept is easily explained: if the Ethereum blockchain was a computer, its blocks different logic boards and smart contracts its apps, the EVM would be its operating system.
In many ways, it is the core of the blockchain’s structure: a program that executes application code and smart contracts, providing an environment for them to run alongside the Ethereum network. It is a very flexible and Turing-complete machine, able to run any program coded in any programming language, which makes it an obvious candidate for deep penetration of any programming landscape – these include Solidity, Vyper, Python and Yul among many others.
The machine’s flexibility is what led to a proliferation of decentralised finance and NFT projects being created within the Ethereum environment, further solidifying its market share through the non-fungible explosion of the past couple of years. Its distributed consensus mechanism, on the other hand, allows users to run complex smart contracts across various computing environments without being impacted by single-node failures.
While competition is indeed on the horizon as always, there is an increasing number of EVM-compatible layer-2 blockchains out there, further cementing it as a staple of the future of Web3 development.
As revolutionary as it is, however, not even this great EVM is perfect. As with most Ethereum-based solutions, it has been plagued by the need for extreme efficiency in smart contract design. The high transaction costs (gas fees) characteristic of Ethereum (though this has been lessened recently by the Merge) favour experienced developers who are able to maximise throughput without incurring in excessive service costs (which would inevitably have to be passed onto clients).
It’s not even reached its final form yet, either: post-Merge, the plan is for a massive shift towards a new virtual machine, branded eWASM.
eWASM stands for Ethereum Web Assembly, where ‘WebAssembly’ is an open standard designed by a group of high profile developers from the World Wide Web Consortium, including employees of Apple, Google, Mozilla and Microsoft.
eWASM will address some of the issues just mentioned: it plans to be much faster and efficient than EVM, and is designed to be human-readable, leading to much shorter debugging and reading times for developers. It also retains the compatibility element of EVM, while improving on its security profile.
As welcome and needed as this shift is, it won’t be an industry first, and the road to its success is well paved: Polkadot, Cardano, EOS, Tron and NEAR all have already initiated a transition to their own dedicated WAS machine.
The New Challenger: Fantom
Someone is willing to challenge this success story, however.
Fantom is an open-source, permissionless and decentralised smart-contract blockchain which was designed specifically to challenge Ethereum’s lead in the sector. Its token is much smaller than ETH, with a market cap of around $6 billion and daily volume around $2 billion.
It has a very well developed governance system, provides a scalable environment, its multi-use token has great potential and its reliance thus far on the aforementioned EVM solution has led to its quick success thanks to exceptional compatibility.
This is, however, about to change as Fantom has decided to move away from the Ethereum umbrella and go into its own virtual machine development. Lamenting slow throughput and lack of substantial evolutionary steps with the original EVM, the Fantom Foundation (which runs the project) built their own virtual device in partnership with the University of Sydney and Yonsei University.
It is designed to remain vastly compatible, and was Solidity-friendly from day one to allow for easy migration into the environment. It also features parallel processing and bytecode-compression, leading to faster transactions and a very efficient storage system. The Fantom Foundation’s very own tests show a dramatic 8.1x speed increase and a staggering 98% reduction in storage requirements as a result.
Announced in March 2022, the Fantom Virtual Machine (FVM) has already gone through an initial revamp and innovation cycle, made public this past fall.
The second generation of the challenger project puts further emphasis on database efficiency: Fantom has developed an entirely new data structure that compacts storage addresses and hinges on files as opposed to key-value databases, a solution which can be compared to virtual memory and swapping in traditional operating systems such as Linux.
The innovations don’t stop here: FVM also uses adaptive smart contract execution, and implements C++ support through a complete rewrite aimed at increasing speed while maintaining security uncompromised.
Further, it revolutionises the priority of transaction processing, conventionally a sequential and thus slow process, with the introduction of parallel transaction processes. These do not cause clashes and instead increase efficiency, especially when the outcome of each transaction is linked by an existing smart contract rule.
In many ways, it’s clear that the Fantom Foundation is firmly moving away from an intent to integrate Ethereum in their functions to improving it, and it’s going all in on the bet.
Technology Isn’t Enough
It’s hard to write a concluding paragraph when considering the implications and evolutions on such a promising piece of blockchain tech which is very much in its relative infancy, and it is made more difficult by the fact that this is one of the most promising Ethereum environment competitors we have seen roll out in recent years.
That said, what stopped the run up of many equally promising challenger projects was not the underlying tech – even the most ardent ETH bag holder would admit it comes with many flaws to fix – but rather with the mammoth task of kickstarting a massive paradigm and user base shift in the middle of a bear market.
Despite this, the basis for success is there, and if the Fantom Foundation continues to march ahead with careful and meticulous technical planning while the sunny days return to the world of crypto investment, they are sure to be positioned for a great future.
Until then, EVM remains a more solid bet.