Ethereum, the second most valuable blockchain by market cap, leads the industry with the highest total-value-locked (TVL) and monthly active developers.
However, its rapid growth has intensified the need for enhanced scalability to keep pace with user demand and reduce fees.
The Ethereum Virtual Machine (EVM) is central to Ethereum and other EVM-compatible chains, powering DeFi applications and acting as the execution environment for validators. Yet, as user demand surges, the traditional EVM’s sequential transaction processing creates a critical bottleneck.
Parallel EVM presents an innovative solution that allows simultaneous execution of multiple transactions and boosts throughput and efficiency.
This article explains Parallel EVM its benefits and potential drawbacks.
First: What is the Ethereum Virtual Machine (EVM)?
The Ethereum Virtual Machine (EVM) is the execution runtime environment for the Ethereum network, which is responsible for running smart contracts and facilitating their interactions.
It’s also the environment where validators run nodes to process transactions and achieve finality.
Also Read: What is the Ethereum Virtual Machine( EVM)?
EVM Compatibility
As the first blockchain to support smart contracts, Ethereum has grown into a dominant force with a total value locked (TVL) of $47 billion.
It leads the decentralized finance (DeFi) sector and is a major player in decentralised applications (dApps), boasting the most monthly active developers in the blockchain ecosystem.
Source: Electric Capital (2023 Crypto Developer Report)
Solidity, Ethereum’s primary programming language, has also become one of the most widely used languages for smart contract development.
Due to Ethereum’s success, other independent blockchains have adopted the Ethereum Virtual Machine (EVM). EVM-compatible blockchains, such as BNB Chain and Polygon, enable the execution of Ethereum-based smart contracts, enhancing interoperability and attracting developers already familiar with Ethereum’s development environment.
This compatibility allows existing dApps to migrate seamlessly or expand their reach beyond Ethereum, fostering a more interconnected blockchain ecosystem.
The Limitations of the Ethereum Virtual Machine
The EVM is designed to process transactions sequentially—one after another in a linear order.
While this method is straightforward and ensures that each new transaction is compatible with those before it, it can also create bottlenecks.
Source: Arkham
When network activity rises, sequential processing struggles to keep up, resulting in more transactions competing for inclusion in the next block.
As transaction volumes increase, this can lead to delays and higher gas fees, ultimately impacting network efficiency and impeding scalability.
Let’s see how parallel EVM tackles this Limitation.
What is Parallel EVM?
Parallel Ethereum Virtual Machine (Parallel EVM) is an advancement of the Ethereum Virtual Machine, designed to enhance Ethereum’s scalability by processing multiple non-conflicting transactions simultaneously. Unlike the EVM, which processes transactions sequentially.
Parallel EVM enables concurrent execution and simultaneous processing of multiple independent transactions, improving transaction throughput and reducing processing times ultimately helping to lower gas fees.
This parallel processing capability addresses the bottlenecks associated with sequential transaction handling, making the system more responsive to high transaction volumes. As a result, Parallel EVM boosts blockchain efficiency, enabling faster and more scalable transaction processing.
Source: Arkham
In a standard EVM setup, transactions are processed one by one. For instance;
- if Sam, Mia, and Leo each initiate separate, non-conflicting transactions:
- The node processes Sam’s transaction first, then moves on to Mia’s, and finally completes Leo’s.
- This sequential approach can lead to bottlenecks when there’s high network activity, causing delays and higher gas fees for users.
Whilst Parallel EVM is designed to handle multiple non-conflicting transactions at the same time.
- Using the same example, the node can process Sam’s token transfer, Mia’s NFT mint, and Leo’s staking transaction simultaneously because they don’t interfere with each other.
- This parallel processing significantly reduces transaction processing times, making the blockchain more efficient.
When nodes across the network adopt Parallel EVM, this efficiency compounds This parallel processing capability ultimately leads to a more responsive network that can manage higher transaction volumes, providing users with a smoother, more cost-effective experience.
Challenges and Drawbacks of Parallel EVMs
Despite the promise of faster transactions and throughput parallel EVM also comes with some drawbacks and challenges some of which are:
Higher Hardware Requirements and Potential Centralisation Risks
Running a node in a Parallel EVM network may require more powerful hardware to handle simultaneous transactions. This could lead to centralization if only entities with high-end resources can participate as validators as smaller validators may be unable to keep up with the hardware and software upgrades required.
Security Concerns
Any new processing method, including parallel transaction execution, introduces potential security risks. Parallel EVM requires stricter security audits to prevent vulnerabilities from being exploited, as one error in the parallel execution process could impact multiple transactions simultaneously.
Consensus Mechanism Constraints
Even with faster transaction processing, the overall speed of the blockchain remains tied to its consensus mechanism. The network must align Parallel EVM’s transaction throughput with the pace at which consensus is achieved to maintain stability and integrity.
Experimental Stage and Limited Adoption
Parallel EVM is still largely experimental, and its real-world performance and robustness remain unproven without broader adoption. More testing and real-world usage are needed to assess its effectiveness and long-term reliability.
The Parallel EVM Ecosystem
Source: CoineGecko
Despite the above challenges and drawbacks, several projects have successfully implemented Parallel EVM, demonstrating the technology’s potential. According to data from CoinGecko at the time of writing, the total combined market capitalization of the Parallel EVM token category stands at $1.7 billion. Notably, only three projects currently fall under this category, highlighting the novelty of the concept.
- Sei: Sei is a Parallel EVM-compatible layer-1 blockchain specifically designed to support decentralized exchanges (DEXs). It is the largest project in the Parallel EVM ecosystem, with a market capitalization of $1.6 billion and a total value locked (TVL) of $162 million.
- Neon: Neon is a parallel EVM execution environment built on the Solana blockchain, enabling developers to deploy Ethereum-native decentralized applications (dApps) on Solana. Launched in late 2022, Neon EVM was the world’s first mainnet parallelized EVM. It currently has a market capitalization of $48.9 million and a TVL of $1.2 million.
Looking ahead, there’s much to be excited about, the layer-1 blockchain Monad, which is also compatible with Parallel EVM, is expected to launch its mainnet in Q4 2024 or Q1 2025.
These projects represent the early adopters of Parallel EVM, and their success will likely shape the broader adoption of parallel EVM within the Ethereum ecosystem.
Closing Thoughts
Parallel EVM represents a promising step toward improving transaction processing and scalability on Ethereum, but it is only one piece of the larger puzzle.
The broader challenge—the blockchain scalability trilemma—remains: balancing security, decentralisation, and scalability simultaneously is a difficult feat for any blockchain.
Parallel EVM offers an alternative scaling approach, distinct from traditional Layer-2 solutions, rollups, and sidechains, by enabling simultaneous execution and reducing latency.
As the quest for greater speed and efficiency continues, we eagerly anticipate the next wave of advancements—and how Parallel EVM will evolve and contribute to the future of the Ethereum blockchain ecosystem.
[Author’s Note: This article does not represent financial advice, everything written here is strictly for educational and informational purposes. Please do your own research before investing.]
Author: Godwin Okhaifo
Also Read: What is The Ethereum Pectra Upgrade?
