What is EVM and How Does It Work?

The Ethereum Virtual Machine (EVM) is the deterministic, sandboxed runtime that executes smart contracts across EVM-compatible networks. For web3 developers, the EVM is the de facto execution environment for decentralized applications, defining how bytecode runs, how state is read and written, how gas is consumed, and how transactions change the global state. Mastering how the EVM works is essential for writing correct, gas-efficient, and scalable smart contracts—and for shipping responsive dApps with great UX.

Sei builds on this foundation with a parallel EVM designed to remove the core bottleneck of sequential execution. By parallelizing independent transactions and delivering subsecond finality, Sei enables real-time applications that would feel sluggish elsewhere. For builders, this translates directly into higher throughput, lower latency, and more predictable performance for exchange, gaming, social, and onchain market primitives. Combined with institutional-grade infrastructure and a developer-friendly ecosystem, Sei lets you ship dApps that feel fast and resilient from day one. To explore the ecosystem and get started, visit the Sei documentation and developer resources on Sei.io.

This article gives you a developer-focused view of the EVM—how it’s structured, how it executes your code, where gas goes, and how to design contracts that maximize parallel throughput on Sei. You’ll find practical patterns, concrete code examples, and actionable guidance for testing, deploying, and monitoring production-grade dApps.

Table of Contents

• Quick Summary: What is the EVM?
• 1. The Core Concept: A Distributed State Machine
• 2. EVM Architecture: Under the Hood
• 3. How the EVM Executes Code
• 4. Gas: The Fuel of the EVM
• 5. Beyond Ethereum: The EVM Standard
• 6. Parallel EVM: The Sei Approach
• Frequently Asked Questions (FAQ)
• Related Resources (Cluster Content)
• Conclusion

Quick Summary: What is the EVM?

• It’s Virtual: The EVM isn't a physical computer; it is a replicated environment operating simultaneously on thousands of nodes (computers) worldwide.
• It’s a State Machine: It manages the state of the blockchain, ensuring that every transaction moves the network from one valid state to the next.
• It’s Isolated: Smart contracts run in a "sandbox" environment, preventing them from accessing the underlying hardware of the node running them.
• It’s Deterministic: No matter which node executes a transaction, the result is always exactly the same.

1. The Core Concept: A Distributed State Machine

To understand how the EVM works, you first need to understand what it is fundamentally.

Computer scientists classify the EVM as a Turing-complete distributed state machine. Unlike a standard computer that runs an operating system (like Windows or macOS) on dedicated hardware, the EVM runs on top of the Ethereum protocol.

Its primary job is to update the World State.

• The Input: The current state of the blockchain ($S$) + a new block of transactions ($T$).
• The Process: The EVM executes the transactions according to its rules.
• The Output: A new, valid state ($S'$).

This mechanism ensures consensus. If thousands of nodes processed the same transaction and got different results, the network would split (fork). The EVM’s strict rules guarantee that every node lands on the exact same result.

2. EVM Architecture: Under the Hood

The EVM doesn't behave like a normal computer. It uses a specific stack-based architecture designed for security and determinism rather than raw speed. It relies on three distinct types of data storage.

The Stack (The Workspace)

The EVM is a Stack-Based Machine. Imagine a stack of plates: you can only add a plate to the top (PUSH) or remove one from the top (POP).

• Function: It holds inputs and outputs for immediate instructions.
• Characteristics: It is "Last-In, First-Out" (LIFO) and very volatile.
• Constraint: It has a depth limit of 1024 items to prevent attacks that try to crash the system by overloading the stack.

Memory (The Notepad)

Memory is a temporary place to store data during the execution of a single transaction.

• Function: Used for complex calculations, arrays, and strings.
• Characteristics: It is transient—when the transaction finishes, this memory is wiped clean.
• Cost: The cost to use memory increases quadratically. This prevents malicious actors from trying to freeze the network by allocating massive amounts of RAM.

Storage (The Hard Drive)

This is the most critical and expensive component.

• Function: Stores data permanently on the blockchain (e.g., your token balance, the owner of an NFT).
• Characteristics: It persists between transactions and is stored in a complex data structure called a Merkle Patricia Trie.
• Cost: Writing to storage is the most expensive operation in the EVM because every node on earth must update their database to reflect the change forever.

3. How the EVM Executes Code

Developers do not write code that the EVM reads directly. They write in high-level languages like Solidity or Vyper. Here is the lifecycle of an EVM transaction:

1. Compilation: The human-readable Solidity code is compiled into Bytecode.
2. Deployment: This Bytecode is sent to the blockchain and stored at a specific address.
3. Execution (Opcodes): When a user interacts with the contract, the EVM breaks the Bytecode down into Opcodes (Operation Codes).

What are Opcodes?

Opcodes are the basic instructions the EVM understands. Each one performs a tiny, specific task:

• ADD/SUB: Basic math.
• SSTORE/SLOAD: Reading and writing to permanent storage.
• CALLER: Checking who sent the transaction.
• REVERT: Stopping execution and undoing changes if an error occurs.

4. Gas: The Fuel of the EVM

The EVM is Turing-complete, meaning it can technically solve any computational problem given enough time and resources. However, this creates a danger: The Halting Problem.

What if a user writes a contract with an infinite loop? Without a safeguard, every node in the network would get stuck executing that loop forever, freezing the entire blockchain.

The Solution: Gas.

Every Opcode has a fixed cost in "Gas".

• ADD costs very little (computationally cheap).
• SSTORE costs a lot (storage is expensive).

When you send a transaction, you set a Gas Limit (the maximum fuel you are willing to use). As the EVM executes your code, it burns gas. If the gas runs out before the code finishes, the EVM hits a hard stop. It throws a "Out of Gas" error and reverts all changes, but—crucially—the miner keeps the fees. This economic barrier makes Denial-of-Service (DoS) attacks prohibitively expensive.

The EIP-1559 Fee Model

Modern EVM transactions use a dynamic fee structure:

• Base Fee: A mandatory fee determined by network congestion. This fee is burned (destroyed), effectively removing ETH from supply.
• Priority Fee: A "tip" paid to validators to incentivize them to include your transaction faster.

5. Beyond Ethereum: The EVM Standard

The EVM has become the standard for blockchain computation, extending far beyond the Ethereum mainnet.

EVM Compatibility vs. Equivalence

• EVM Compatible: Chains  that support EVM smart contracts but might have different internal architectures or consensus mechanisms.
• EVM Equivalent: Layer 2 solutions that aim to be identical to Ethereum, allowing developers to use the exact same tools and clients without modification.

ZK-EVMs (Zero-Knowledge EVM)

The frontier of EVM development is the ZK-EVM. These are scaling solutions that use Zero-Knowledge proofs to verify EVM execution off-chain.

• Type 1 (Fully Equivalent): Replicates Ethereum exactly (hard to build, slow proofs).
• Type 4 (High-Level Equivalent): Compiles Solidity to a different language friendly to ZK proofs (faster proofs, less compatibility).

6. Parallel EVM: The Sei Approach

Traditional EVM chains face a major bottleneck: sequential execution. Transactions are processed one by one, meaning if User A sends a payment and User B trades an NFT, User B must wait for User A to finish, even if their actions are completely unrelated.

Sei removes this bottleneck with a Parallel EVM. It identifies independent transactions and executes them concurrently, delivering subsecond finality and higher throughput for applications like exchanges and games. This makes Sei the definitive home for high-performance EVM applications.

Optimistic Parallelization

Sei uses optimistic parallelization. It assumes most transactions won't conflict (e.g., two people interacting with different smart contracts) and runs them simultaneously. If a conflict is detected—such as two people trying to buy the same specific NFT at the exact same moment—only those specific transactions are re-run sequentially.

Designing for Throughput

To maximize the benefits of Sei's parallel EVM, developers can use specific design patterns to minimize "state contention" (conflicts):

• Partition State: Instead of storing data in a single global variable (which creates a bottleneck), use mappings keyed by user addresses.
• Avoid Global Counters: Incrementing a single "Total Users" counter on every signup forces all transactions to execute one by one.
• Use Events: Emitting events is often parallel-safe compared to writing to shared storage slots.

Building on Sei: Tools, Docs, and Ecosystem

The Sei ecosystem is designed to feel familiar to EVM developers while unlocking new performance headroom.

• Documentation: Start with the Sei documentation for network endpoints, deployment guides, and EVM specifics.
• Ecosystem and updates: Follow the Sei blog for architecture deep-dives, performance improvements, and ecosystem highlights.
• Overview and positioning: Explore the vision, roadmap, and high-level resources on the Sei main site.

You can use standard tooling—Hardhat, Foundry, ethers.js/web3.js, viem, etc.—and connect to Sei RPC endpoints and explorers. Most teams find the port from other EVM chains is straightforward; the key difference is how much more throughput and UX you can unlock when you redesign hotspots for parallel safety.

Frequently Asked Questions (FAQ)

1. Is the EVM a physical computer?

No. The EVM is a virtual environment (software) that runs on thousands of physical computers (nodes) simultaneously. It simulates a computer to ensure every node executes code exactly the same way.

2. Why do I have to pay "Gas" for transactions?

Gas serves two purposes:

1. Compensation: It pays the validators for the electricity and hardware usage required to process your transaction.
2. Security: It prevents spam and infinite loops. By making computation costly, it stops attackers from clogging the network with endless calculations.

3. Does the EVM only work on Ethereum?

No. The EVM has become a standard used by many other blockchains, including Polygon, BNB Chain, and Avalanche. Innovations like Sei have further evolved the standard by adding parallel execution.

4. What programming languages can I use with the EVM?

While the EVM itself only understands Bytecode (Opcodes), developers write smart contracts in high-level languages. The most popular is Solidity, followed by Vyper. These are then compiled into the bytecode the EVM can read.

5. What happens if my transaction runs out of Gas?

If your set Gas Limit is too low for the computation required, the EVM will stop executing the transaction and revert all changes (meaning the transaction effectively didn't happen). However, you will not get your gas fees back; they are kept by the validator to pay for the work done up to the point of failure.

Related Resources

To deepen your understanding of Sei's Parallel EVM, explore these specific guides:

• EVM General Guide for Sei Blockchain
• Sei Parallelization Engine: Multi-core Blockchain Execution
• Sei v2 - The First Parallelized EVM Blockchain

Conclusion

The Ethereum Virtual Machine is more than just a runtime environment; it is the foundation of the decentralized internet. By balancing isolation, determinism, and economic security via Gas, the EVM allows strangers worldwide to trust code rather than middlemen.

The standard continues to evolve. While traditional implementations prioritized sequential safety, newer iterations like Sei's Parallel EVM are unlocking real-time performance by processing independent transactions concurrently. Whether through Layer 2 scaling, ZK-EVMs, or parallel execution, the EVM architecture remains the definitive platform for global, decentralized computation.

Disclaimer:

This post is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities, digital assets, or investment products. Any forward-looking statements, projections, or descriptions of anticipated activities are subject to risks and uncertainties and may not reflect actual future outcomes. Sei Development Foundation is not offering or promoting any investment in SEI tokens or digital assets, and any references to token-related activity are subject to applicable U.S. securities laws and regulations. All activities described herein are contingent upon ongoing legal review, regulatory compliance, and appropriate corporate governance. This post should not be relied upon as legal, tax, or investment advice.