The rise of blockchain technology has transformed our approach to transparency, security and decentralization in digital interactions.
Yet in this dynamic landscape, as technology evolves, certain challenges have emerged, especially in the context of the Ethereum (ETH) blockchain – scalability, interoperability, and transaction speed.
To address these critical issues, Ethereum Virtual Machine (EVM)-enabled chains are opening new paths to a future where blockchain becomes the cornerstone of our digital lives.
These chains represent the next level of blockchain technology, opening up new horizons of scalability, interoperability, and transactional efficiency. These are stepping stones to wider adoption and fuller realization of the technology.
We’ve taken a deeper dive with Alex Shevchenko, co-founder and CEO of Aurora Labs, the team behind an Aurora-enabled EVM chain built on top of the NEAR protocol, to explore the broad implications of these chains.
From their actual applications, their protections against vulnerabilities, to their role in the decentralized finance (DeFi) ecosystem, this conversation navigates the multifaceted terrain of EVM-enabled chains.
Alex, could you elucidate the main advantages of EVM-enabled chains over other blockchain platforms and how these advantages translate to real-world applications? How do these chains secure against vulnerabilities like the 51% attack?
AS: EVM-enabled chains have established their credibility in the blockchain sphere largely through their interoperability, which means they can communicate and exchange data efficiently with other platforms.
This quality is a boon for developers, as it allows them to take advantage of a vast ecosystem of development tools and services. These include Graph and Covalent for querying blockchain data and frameworks like Truffle and Open Zeppelin SDK which provide the building blocks for blockchain applications.
The 51% attack refers to an event where a single entity takes control of more than half of a network’s mining power. While such an occurrence is theoretically possible, many EVM-enabled chains use Proof-of-Stake (PoS) consensus mechanisms, which make such an attack economically infeasible.
With PoS, control of the network is proportional to the number of tokens held, which means an attacker would have to acquire the majority of the tokens, a prohibitively expensive undertaking.
How do EVM-enabled chains handle scalability and large transaction volumes? How does this scalability facilitate the creation of decentralized applications (dapps)?
AS: An inherent limitation of EVM-enabled chains is the synchronous design, which means that transactions are processed sequentially, which limits the number of transactions that can be processed per second.
However, scalability solutions have been developed to address this issue. For example, multiple EVMs can be running concurrently, each processing a subset of transactions to increase overall throughput.
Scalability directly affects the creation of dapps. More scalable chains can support dapps with more users and more transactions. Notably, various tools and frameworks (like Aurora’s cloud solution, for example) have been developed to streamline the creation of scalable dapps.
Meanwhile, services like Infura and Alchemy are making it easier for developers to get into the blockchain, allowing them to focus on application development rather than infrastructure.
Finding a balance between confidentiality and transparency seems difficult. How do EVM-enabled chains address privacy concerns and protect user data while maintaining transparency and immutability?
AS: Yes, finding the right balance between privacy and transparency is a unique challenge for public blockchains.
On the one hand, the transparent nature of blockchains allows for public auditability and accountability, but on the other hand, it could potentially expose sensitive user data.
Zero Knowledge (ZK) technology is an emerging solution to this conundrum. ZK evidence allows one party to prove to another that they know certain information without revealing the information itself. This technology allows private transactions on public blockchains.
It should also be noted that working with regulators and financial institutions is key to creating a regulatory environment conducive to the wider and safer use of cryptocurrencies.
Could you discuss the role of smart contracts in EVM-enabled chains and how can developers optimize them for performance and cost-effectiveness?
AS: Smart contracts, self-executing contracts with the terms of the agreement written directly into code, are the cornerstone of EVM-enabled chains. They allow developers to create applications that interact with the blockchain in a decentralized and trustless way.
However, since every operation on the blockchain requires gas (a measure of computational effort), it is crucial for developers to optimize their smart contracts for performance and profitability.
In terms of optimization, developers can focus on a number of areas. One is to reduce the amount of storage used by the contract, as storage operations are one of the costliest in terms of gas cost.
Another is to minimize contract complexity, as more complex contracts require more gas. Reducing the number of external contract calls can also significantly save gas.
What is the impact of EVM-enabled chains on the DeFi system and what opportunities do they present for developers and users?
AS: DeFi is arguably one of the most revolutionary developments to come out of blockchain technology. It refers to the use of blockchain technology and cryptocurrencies to recreate and improve traditional financial systems.
With DeFi, financial transactions and services can be carried out peer-to-peer, without the need for intermediaries such as banks or brokers.
EVM-enabled chains are a boon to the DeFi ecosystem. Since DeFi projects are mostly built on Ethereum, the chains ability to be EVM compatible means these projects can be ported with relative ease.
For developers, this opens up a world of possibilities to experiment and innovate in the DeFi space. For users, this means increased access to a wider range of DeFi applications, with potentially improved scalability and lower transaction fees.
For beginners, how to improve the accessibility and usability of blockchain, EVM and smart contracts?
AS: When introducing blockchain technology to newbies, the steep learning curve can be daunting. For example, at Aurora Labs, we have integrated protocol-level meta-transactions and account abstractions into their systems to make the process more accessible to newcomers.
Meta transactions allow users to interact with the blockchain without needing to hold cryptocurrency themselves, as transaction fees can be paid by third parties. Account abstraction, on the other hand, simplifies interaction with the blockchain by allowing smart contracts to pay for their own execution.
This way, users can interact with dapps without understanding the complexity of gas fees and other blockchain-specific mechanisms.
How do EVM-enabled chains manage interoperability with other blockchain networks, and why is this important for the wider adoption of blockchain technology?
AS: In the blockchain world, interoperability refers to the ability of different blockchain networks to share and verify information with each other. Given the diversity of blockchains in existence today, interoperability is crucial to creating a unified and functioning ecosystem.
In the context of EVM-enabled chains, interoperability is typically achieved through protocols known as “bridges”. Bridges are basically programs that allow the transfer of information and tokens between different blockchain networks. They can be thought of as “inter-blockchain lines of communication”.
Aurora Labs has developed its own bridge — the Rainbow Bridge, a protocol that facilitates communication between Ethereum and Aurora/NEAR. It is completely permissionless and trustless, which means anyone can use it without needing special permissions and without needing to trust third parties.