Raquel Liebert bJia

Key Takeaways

Caldera is a Rollup-as-a-Service (RaaS) platform that helps developers launch custom, app-specific rollups with just a few clicks. 

The platform is built around two parts: the Rollup Engine (to create and manage rollups) and the Metalayer (to connect them for cross-chain communication). 

Rollups launched with Caldera are automatically connected and can communicate, share liquidity, and transfer assets with each other easily. 

Introduction

Building on Ethereum can be challenging when the network is busy. As more people use the network, transactions can take longer and cost more. Rollups help by moving activity off the main chain, but many still operate on their own like isolated islands, making it hard to move data or assets between different chains.

Caldera lets you launch your own rollup in minutes, designed specifically for your app and automatically connects it to other chains. That means faster transactions, lower costs, and a smoother experience for users and developers.

What Is Caldera?

Caldera is a Rollup-as-a-Service (RaaS) platform that lets developers launch rollups that are designed specifically for their app’s needs. Instead of starting from scratch, teams can use Caldera’s tools to quickly spin up fast, flexible rollups tailored for use cases like decentralized finance (DeFi), gaming, Non-Fungible Tokens (NFTs), or social platforms.

The Rollup Engine

At the heart of Caldera is the Rollup Engine, a powerful deployment system that lets developers launch and manage custom rollups in just a few clicks or Application Programming Interface (API) calls. This is similar to how Amazon Web Services (AWS) makes it easy to run web applications in the cloud, the Rollup Engine takes care of the heavy lifting so developers do not need to stress over the technical details or be blockchain experts to get started.

Metalayer

The Metalayer is the invisible network that links all Caldera rollups together, allowing them to communicate, share liquidity, and pass messages securely. Instead of each rollup being an isolated island, apps can interact with each other across chains, and users can move assets like tokens or NFTs seamlessly between them.

Together, the Rollup Engine and Metalayer let developers build flexible, application-specific chains without giving up the benefits of a shared ecosystem.

How Does Caldera Work?

1. Launch a rollup 

Developers start by choosing their rollup settings using the Rollup Engine:

Execution layer: Choose from popular rollup frameworks such as Arbitrum Nitro and Optimism Bedrock for optimistic rollups or go with zero-knowledge (ZK) solutions like zkSync’s ZK Stack or Polygon CDK.

Data availability: Choose between options like Ethereum, Celestia, or Avail to store transaction data.

Customization: Adjust performance settings, roll out software upgrades, and scale computing resources on demand

2. Connect instantly with the Metalayer

Once deployed, your rollup is automatically plugged into the Metalayer, which enables:

Intent-based bridging: If you want to move stablecoins like USDC from one rollup to another, the system automatically finds the fastest and cheapest way to do it. This is powered by bridging partners like Across (a cross-chain bridge), Eco (a protocol for efficient transaction routing), and Hyperlane.

Fast settlement: With Hyperlane handling the messaging layer, transfers and cross-chain communication are completed in seconds.

Developer Tools:  Caldera provides APIs, SDKs, and ready-to-use UI components for developers to build cross-chain apps without writing custom bridging logic.

3. Scale on demand

Caldera’s modular architecture lets developers:

Launch new rollups: A DeFi app could spin up a separate rollup just for high-volume traders, while a gaming platform might launch dedicated rollups for different game worlds or regions.

Upgrade without downtime: Developers can roll out protocol upgrades like adding new features or integrating with different data availability layers without disrupting the user experience.

Scaling compute resources: If demand increases, like during an NFT drop or a major in-game event, teams can increase computing power to maintain performance.

Ecosystem Overview 

Caldera is powering an expanding network of over 50 active rollups across a wide range of use cases, including DeFi, gaming, social apps, and infrastructure protocols. 

Some of the notable chains built on Caldera include:

Manta Pacific: A modular Layer 2 focused on ZK applications.

ApeChain: Designed for the ApeCoin ecosystem, enabling fast and cheap transactions for NFTs and gaming.

Injective’s inEVM: A rollup that brings EVM compatibility to the Injective ecosystem.

ERA Token

The ERA token is the native utility token of the Caldera ecosystem. The token is used for a variety of purposes, including:

Gas fees: ERA is used to pay for transaction fees across the Metalayer, supporting interactions between rollups.

Staking & Network Security: Validators stake ERA to help secure the network, verify cross-rollup messages, and support future subnets like those involved in generating ZK proofs.

Governance: ERA holders can propose and vote on protocol changes, grant funding, and elect members to roles such as the security council. While initial governance is bootstrapped by the Caldera Foundation, long-term decision-making will move to on-chain community voting.

Caldera (ERA) on Binance HODLer Airdrops

On July 16, 2025, Binance announced ERA as the 27th project on the Binance HODLer Airdrops. Users who subscribed their BNB to Simple Earn and/or On-Chain Yields products from July 1 to 5 were eligible to receive ERA airdrops. A total of 20 million ERA tokens were allocated to the program, accounting for 2% of the total token supply.

ERA was listed with the Seed Tag applied, allowing for trading against the USDT, USDC, BNB, FDUSD, and TRY pairs.

Closing Thoughts

Caldera offers a modular way to build and scale blockchain apps by letting teams launch custom rollups with built-in connectivity across chains. With the Rollup Engine handling deployment and the Metalayer supporting cross-chain communication, Caldera aims to make building on-chain apps faster, smoother, and more flexible.

Further Reading

What Is Cross-Chain Interoperability?

Quantum Computers and Cryptocurrencies

What Are Bitcoin Layer 2 Networks?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Chainbase is a decentralized network that takes data from different blockchains and turns it into structured datasets that are easy to work with.

It runs on a dual-chain design where Cosmos handles network coordination and governance, and EigenLayer brings in Ethereum’s security and computing power through restaking.

The network runs on four core layers: Data Accessibility, Co-Processor, Execution, and Consensus.

Developers can write and publish manuscripts to transform raw blockchain data into useful formats, earning rewards whenever others use their work.

Introduction

Blockchain networks record a lot of valuable information, like every token transfer, smart contract interaction, NFT mint, and DAO governance vote. Even though the data is permanent, it’s often spread across different chains and stored in different formats. If you want to pull data from multiple networks, you might have to run your own nodes, write custom indexing code, or depend on external services that may not be reliable.

Chainbase is building a hyperdata network that pulls together data from different blockchains, organizes it, and makes it easy to work with. This lets developers create data-driven applications such as AI tools, DeFi analytics dashboards, and cross-chain wallets more efficiently and with fewer technical barriers.

What Is Chainbase?

Chainbase is a decentralized network that takes data from different blockchains and turns it into clean, structured datasets that are easy to work with. Instead of dealing with scattered or raw blockchain data, developers can use the platform to query, analyze, and act on multi-chain data in real time. 

This is especially valuable for artificial intelligence (AI) agents and cross-chain applications that depend on accurate, high-quality data to make decisions and operate effectively. 

How Does Chainbase Work?

Chainbase is powered by a dual-chain architecture that combines Cosmos and EigenLayer. The platform operates through a four-layer system, with each layer handling a specific part of the data journey. 

Data accessibility layer

Chainbase collects and organizes data from both on-chain and off-chain sources. On-chain data includes information like transaction histories and smart contract interactions, while off-chain covers larger or more private information like AI models or app metadata that are stored in decentralized systems. 

The data comes from a network of decentralized providers, so no single party has control. The platform is also able to verify the accuracy of data without revealing any sensitive information with zero-knowledge proofs (ZKP).

Co-processor layer

This layer is powered by manuscripts, which is a core concept of the Chainbase ecosystem. A manuscript is a script that defines how blockchain data should be processed, like what to extract or how to clean and format it in a way that apps and AI tools can use. 

For example, a developer might write a manuscript that filters out the token transfers from a smart contract or tracks wallet behavior patterns for fraud detection.

Once the manuscript is published to the network, anyone can use it and the original creator earns rewards each time it’s used. It’s a way for developers to turn their knowledge into something valuable and reusable. As more developers contribute, the platform evolves into a growing library of trusted, ready-made data tools that anyone can plug into.

Execution layer

The Chainbase Virtual Machine (CVM) is a custom-built environment designed for executing manuscripts at scale. It uses data and task parallelization to handle multiple jobs at once and enable fast and efficient processing even at scale.

This layer is secured by EigenLayer, which lets Autonomous Verifiable Services (AVS) node operators restake ether or liquid staking tokens (LSTs) to provide the computing resources needed. They help keep the network decentralized and secure and are rewarded based on how much work they do.

Consensus layer

Chainbase uses CometBFT, a Byzantine Fault Tolerant (BFT) consensus algorithm that offers fast and reliable finality. It also uses a Delegated Proof of Stake (DPoS) system, where validators check data operations and ensure everything stays consistent, while delegators can support trusted validators by staking their tokens.

Ecosystem Participants 

Developers 

Developers not only consume data to power their applications, but also produce it by building manuscripts. Using the Chainbase Software Development Kit (SDK), developers can:

Create manuscripts to extract and transform data for real-world use cases like AI models, DeFi dashboards, or fraud detection tools.

Access verified, cross-chain datasets to build smarter, faster DApps.

Earn rewards based on how often their manuscripts are used and how valuable they are to the ecosystem.

Operators

Operators provide the computing power that runs the Chainbase network’s execution Layer. They play a key role in processing manuscripts and keeping data workflows running efficiently at scale.

They run the CVM to execute data tasks and handle large volumes of information.

By restaking ETH or LSTs through EigenLayer, they gain the ability to participate in Chainbase’s decentralized execution system.

Their contributions are rewarded in tokens, with earnings on the performance and reliability of their infrastructure.

Validators

Validators are responsible for maintaining the integrity and security of the network. They confirm that all data transformations and transactions are valid and consistent. 

They take part in the network’s consensus process using the CometBFT and DPoS system.

They validate manuscript results, update the network state, and help maintain fast, fault-tolerant finality.

In return, they earn rewards for keeping the system accurate, trustworthy, and tamper-resistant.

Delegators

Delegators help secure the network by staking their tokens with trusted validators and operators. While they don’t run infrastructure themselves, their support is vital to the health and decentralization of the system.

They choose who to support by delegating their tokens to validators or operators they trust and earn a share of the rewards generated. 

Delegators can also take part in governance, voting on protocol upgrades, funding proposals, and other key decisions that shape the future of Chainbase.

C Token

The C token is the native utility token of the Chainbase ecosystem. The token is used for a variety of purposes, including:

Dataset access: C is used to pay for accessing datasets and running Manuscripts across the Chainbase network.

Staking & network security: Validators and operators are required to stake C tokens to help maintain the network and data processing workflows. Delegators can also stake their C tokens to back trusted participants, helping to secure the system and earning a share of the rewards in return.

Governance: C token holders have the ability to vote on important protocol decisions including upgrades, incentive structures, and ecosystem parameters, helping to guide the future of Chainbase.

To make Chainbase easier to access and use, the C token was launched on both Base and BNB Smart Chain (BSC). By supporting multiple chains, Chainbase aims to broaden its reach while giving users and developers more flexibility in how they interact with the ecosystem.

Chainbase (C) on Binance HODLer Airdrops

On July 18, 2025, Binance announced C as the 28th project on the Binance HODLer Airdrops. Users who subscribed their BNB to Simple Earn and/or On-Chain Yields products from July 6 to 9 were eligible to receive C airdrops. A total of 20 million C tokens were allocated to the program, accounting for 2% of the total token supply.

C was listed with the Seed Tag applied, allowing for trading against the USDT, USDC, BNB, FDUSD, and TRY pairs.

Closing Thoughts

Getting useful data from blockchains is difficult when you are dealing with multiple networks and different data formats. Chainbase is designed to make that process easier by turning scattered blockchain data into something clean, structured, and ready to use.

Further Reading

What Is a Virtual Machine (VM)?

What Are Modular Blockchains?

The Relationship Between Blockchain and AI

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

The Great Depression was a global economic crisis that began in 1929 and lasted through the 1930s. It led to substantial declines in employment, industrial output, and living standards worldwide.

The crisis began with the 1929 stock market crash and was worsened by bank failures, reduced trade, and falling consumer demand.

Government interventions, such as the New Deal in the United States and World War II production efforts, contributed to the eventual recovery.

The Great Depression influenced economic policymaking and the development of safety nets for future generations.

Introduction

The Great Depression stands as one of the most important events in economic history. Marked by widespread job loss, business failures, and a decline in quality of life for millions, it reshaped how governments and societies view economic stability and policymaking. Understanding the Great Depression not only sheds light on an important period of the past but also helps inform measures taken to avoid similar crises in the future.

What Caused the Great Depression?

The Great Depression didn’t have a single cause but rather emerged from a combination of factors. Let’s go through the main ones.

Stock market crash of 1929

The economic downturn began in the United States with the stock market crash of October 1929, often referred to as "Black Tuesday." Speculation had run rampant on the stock market throughout the decade, leading to artificially inflated valuations. 

When investors lost confidence and share prices began to collapse, it triggered a cascading effect. Millions of Americans—many investing with borrowed money—lost their savings overnight as the stock market spiraled downward.

Failures in the banking system

As panic spread, numerous banks experienced runs and failed. People who lost their savings had less and less to spend, further slowing economic activity.

Panic soon spread beyond Wall Street. Waves of bank failures swept across the United States as depositors tried to withdraw their money en masse. Since there was little insurance or regulation to protect savers, the demise of a single bank often meant that entire communities lost their life savings. With banks folding, credit lines dried up and impacted every sector of the economy.

Decline in international trade

While the crisis began in the United States, its effects were felt worldwide. Many European economies, already weakened by the costs of World War I, faced shrinking markets for their exports. 

Governments created new tariffs and protective barriers—such as America’s Smoot-Hawley Tariff Act of 1930—in hopes of shielding domestic industries. Unfortunately, these policies triggered retaliatory measures abroad, causing global trade to plummet.

Decreased consumer spending and investment

With rising unemployment and uncertainty, individuals and businesses cut back on spending and investment, creating a cycle of declining demand and further layoffs. The economic crisis became self-reinforcing, leaving little room for organic recovery.

Global Impact and Human Cost

The effects of the Great Depression were felt across the globe, with industrialized nations in North America, Europe, and beyond experiencing severe economic contractions.

Unemployment and poverty

In some countries, unemployment reached as high as 25%. Many people lost their jobs, and entire families struggled to afford basic necessities. Homelessness increased, and soup kitchens and bread lines became common in urban centers.

Business closures

Businesses failed by the thousands, from small local shops to industrial giants. Popular manufacturers, agricultural producers, and financial firms were forced to close as demand evaporated. The decline in production echoed through supply chains and entire communities.

Social and political shifts

The widespread economic hardship contributed to social unrest and political change. In some countries, economic instability became a breeding ground for political extremism and led to changes in leadership and government ideology. Democratic nations instituted reforms, while others saw the rise of authoritarian movements.

The Path to Recovery

The road to recovery from the Great Depression was long and uneven. No single solution sufficed. It took a combination of innovative policies and the extraordinary circumstances of global conflict to reignite economic engines.

Government programs

In the United States, President Franklin D. Roosevelt undertook an ambitious program of economic relief and reform known as the New Deal. These measures sought to provide jobs, stimulate demand, and restore faith in the financial sector. 

Initiatives ranged from public works projects to the establishment of regulatory bodies overseeing banks and the stock market. Many developed countries introduced their own versions of unemployment insurance, pension plans, and other welfare benefits during this era.

The impact of World War II

The onset of World War II prompted governments to inject resources into industry and infrastructure. This helped boost production and job creation, playing an important role in reversing the economic downturn in many countries.

Lasting Effects and Lessons Learned

The Great Depression had a lasting influence on both economic thought and government policy. In response to the crisis, regulators introduced important reforms and safety nets, including deposit insurance, securities regulation, and social security programs. 

In other words, policymakers developed a more interventionist approach, with governments taking on greater responsibility for managing the economy, ensuring bank stability, and providing a social safety net in times of crisis.

Closing Thoughts

Looking back, the Great Depression serves as an important reminder of how fragile the world economy can be. While a lot has changed since the 1930s, the lessons learned from that era still influence how leaders and experts handle today’s challenges.

Further Reading

What Is Crypto Market Sentiment?

The 2008 Financial Crisis Explained

The Psychology of Market Cycles

Black Monday and Stock Market Crashes Explained

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Lagrange is a decentralized infrastructure platform made up of three main parts: a ZK Prover Network, ZK Coprocessor, and the DeepProve zkML library.

The project helps developers outsource heavy computations and prove the results are valid using zero-knowledge proofs (ZKP).

Developers can use it to verify historical data, run off-chain logic, and move trusted information across blockchain networks.

Introduction

Let’s say you are trying to figure out the average price of ether (ETH) across several blockchain networks. It’s not an easy task if you are trying to avoid using oracles or paying high transaction fees to access historical data. 

Lagrange makes the process easier by moving the heavy computation off-chain, generating zero-knowledge proofs (ZKP) and verifying the results on-chain. This way, you can move, compute, and prove data across different blockchains more securely and efficiently.

What Is Lagrange?

Lagrange is a crypto infrastructure project that features three key products: a zero-knowledge (ZK) Prover Network, ZK Coprocessor, and the DeepProve zkML library.

ZK Prover Network

Lagrange’s Prover Network is a decentralized network of operators that is able to generate ZKP on demand. If a decentralized application (DApp) needs to prove that a result was computed correctly, it simply sends a request to Lagrange. 

The Prover Network does the complex math off-chain and returns a compact proof that smart contracts can verify. There is no need for the DApp to rerun the computation on-chain or rely on a third party for validation. 

Unlike traditional setups that rely on a single coordinator (which can become a bottleneck), Lagrange splits its network into independent subnetworks. That means multiple blockchains, rollups, or apps can use it all at once and the network can scale with demand.

The ZK Coprocessor

Lagrange’s ZK Coprocessor is designed to work like a trustless query engine for blockchain data. Developers can write SQL queries to pull data from smart contract storage across thousands of blocks, run calculations like averages or sums, and get a ZKP. This proof can then be plugged directly into a smart contract and verified.

This feature works across blockchain networks, so you can query data from Layer 2s like Base and verify the result on Ethereum without needing a bridge. Developers now have another option for querying blockchain data besides building their own blockchain indexers, writing complex custom logic, or relying on centralized APIs.

zkML DeepProve 

DeepProve is Lagrange’s zkML system that lets developers prove their Artificial Intelligence (AI) models are running correctly without revealing the model or its inputs. It works by generating ZKP for machine learning inferences, so anyone can verify that a prediction came from the right model and has not been tampered with. This gives you more confidence and trust in the AI response as it is backed by cryptographic proofs.

How Does Lagrange Work?

Prover Network

Lagrange’s Prover Network runs on EigenLayer and is backed by more than 85 institutional-grade Autonomous Verifiable Services (AVS) operators. These operators run a lightweight program called a worker binary that listens for incoming tasks. When a developer needs a proof, the network picks up the job and the assigned operators run the computation off-chain before returning a ZKP. 

There is a strong incentive for prover operators to stay reliable. If they do not complete their assigned jobs correctly or on time, they risk getting slashed, meaning they lose part of their staked funds. The Prover Network is designed to be flexible, with support for proof systems like Plonky2, Plonky3, and potentially other systems in the future, depending on their needs.

DARA (Double Auction Resource Allocation)

DARA is Lagrange’s resource allocation system that powers the Prover Network behind the scenes. The system matches developers who need computation with operators who provide it. Here’s how it works in practice:

If you're a developer, you define how much computation you need and how much you're willing to pay.

If you're an operator, you share how much capacity you can offer and your cost.

DARA automatically matches both sides, ensuring that developers don’t overpay and operators are rewarded fairly.

The system is designed to be efficient and fair: you only pay if your entire job can be completed. If the network can’t fully process your request, it won’t go through. By encouraging truthful bidding and eliminating partial or manipulated results, DARA helps ensure the marketplace runs smoothly.

Potential Use Cases

Cross-chain governance: Use Lagrange’s services to generate proofs of events across multiple blockchains. If a DAO vote takes place on Scroll, you can generate a proof and verify that result directly on Ethereum without needing a bridge.

Rollup infrastructure: Rollups can plug into Lagrange to outsource generating ZK or fraud proofs instead of building their own proving infrastructure.

Healthcare: AI models can be trained on sensitive patient data and can make predictions and prove correctness without revealing any personal health information. This enables privacy-preserving diagnostics and medical tools.

Finance and compliance: Financial institutions can verify that AI models meet regulatory requirements while keeping proprietary algorithms and data confidential. 

Lagrange Foundation and Labs

The Lagrange Foundation is a new, independent organization focused on growing the Lagrange ecosystem. It manages the day-to-day operations of the Prover Network and supports builders with resources like technical guidance, marketing, and ecosystem partnerships. On the other hand, Lagrange Labs will focus on research and development in areas like ZK proof generation and verifiable AI. The technologies developed by Labs will be integrated into the Prover Network over time, helping to support real-world use cases and long-term ecosystem growth.

LA Token

The LA token is the native utility token of the Lagrange ecosystem. The token is used for a variety of purposes, including:

Proof generation: You can use the token to submit ZK proof requests on the Lagrange network. The cost depends on how much computation your task requires.

Reward system for provers: Operators who generate or aggregate ZK proofs are paid in the token, no matter what currency the request came in. This helps align provers with the long-term success of the network.

Staking and delegation: Token holders can stake or delegate the token to specific provers. This helps reduce proving costs for selected operators and gives the community a say in distributing the rewards.

Securing the network: Provers must meet performance standards or risk losing part of their staked tokens. Delegators earn rewards based on how well their chosen provers do. Everyone has a shared interest in keeping the network trustworthy and running smoothly.

Lagrange (LA) on Binance HODLer Airdrops

On July 9, 2025, Binance announced LA as the 26th project on the Binance HODLer Airdrops. Users who subscribed their BNB to Simple Earn and/or On-Chain Yields products from June 22 to 25 were eligible to receive LA airdrops. A total of 15 million LA tokens were allocated to the program, accounting for 1.5% of the total token supply.

LA was listed with the Seed Tag applied, allowing for trading against the USDT, USDC, BNB, FDUSD, and TRY pairs.

Closing Thoughts

Lagrange offers a practical solution for developers and protocols that need scalable, verifiable off-chain computation. By combining a decentralized prover network, an efficient resource allocation system, and a developer-friendly coprocessor, Lagrange makes proving data and computation easier, faster, and more accessible.

Further Reading

What Is Liquid Staking?

Improving Crypto Transparency With Zero-Knowledge Proof

What Are Zk-Rollups? The Layer-2 Scalability Technique

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Virtual machines (VMs) let you run different operating systems or applications on the same device without extra hardware. 

VMs are great for safely testing new software, trying out other systems, or isolating programs that might be risky.

VMs like the Ethereum Virtual Machine (EVM) enable smart contracts and decentralized applications (DApps) to run reliably across a global network of computers.

While VMs offer flexibility and control, they can come with trade-offs in performance, resource usage, and complexity.

Introduction

Have you ever wanted to run Windows on your MacBook or test a Linux app without changing your operating system or buying a separate computer? VMs let you do that by creating an isolated environment where different operating systems and applications can run safely. They’re also widely used in blockchain networks to support smart contracts and decentralized applications (DApps).

What Is a VM?

A VM is like a computer you can set up with just a few clicks, and no extra hardware is needed. You can install an operating system, save files, run apps, and connect to the internet, but you're running it inside your existing computer, also known as the host.

Your host system does the heavy lifting behind the scenes, lending out its memory, processing power, and storage so the VM can run smoothly. This is especially useful if you need to use software that's only available on another operating system. 

How Do VMs Actually Work?

Behind the scenes, a piece of software called a hypervisor manages all of this. The hypervisor takes your computer’s physical resources like CPU, Random Access Memory (RAM), and storage and divides them up so multiple VMs can use them at once.  

There are two main types of hypervisors:

Type 1 (Bare-metal): These are installed directly on hardware and are often used in data centers or cloud platforms. They’re built for performance and efficiency.

Type 2 (Hosted): These run on top of your regular operating system (like apps) and are suited for testing and development.

Once a VM is set up, you can start it just like a real computer and install software, browse the web, or build applications.

Why Use a VM?

1. Test new operating systems 

With a VM, you can test different operating systems without making any changes to your main computer. It’s like trying out a new system in a safe, separate space.

2. Isolate risky software

Need to open a file you are not sure about or test an unfamiliar app? Running it in a VM keeps your computer protected, so if you encounter malware or a system crash, your main computer won’t be affected.

3. Run legacy or unavailable software

Some programs only work on older systems like Windows XP. A VM can recreate that environment, letting you keep using software that might not run on today’s devices.

4. Develop and test code across platforms

VMs make it easier for developers to test code on different operating systems and simulate how new applications will behave in different environments.

5. Power the cloud

Many cloud services (like AWS, Azure, and Google Cloud) are built on VMs. When you launch a cloud instance, you are starting a VM in a remote data center that is ready to host websites, apps, or databases.

How Blockchain Networks Use VMs 

While traditional VMs are isolated sandboxes, blockchain virtual machines act as the engine that runs smart contracts in blockchain networks. The Ethereum Virtual Machine (EVM) lets developers write smart contracts in languages like Solidity, Vyper, and Yul and deploy them on Ethereum and other EVM-compatible networks. The EVM ensures that every node on the network follows the same rules when creating or interacting with smart contracts.

Blockchain networks implement their own types of VMs based on design goals. Some focus on speed and scalability, while others aim to be more secure or flexible for developers. Networks like NEAR and Cosmos use WebAssembly (WASM)-based VMs, which support smart contracts written in multiple programming languages. 

Other blockchain networks like Sui use MoveVM, which executes smart contracts written in the Move language. The Solana blockchain uses a custom runtime, often called the Solana Virtual Machine (SVM), that is designed to process transactions in parallel and handle large amounts of network activity.

Virtual Machines in Action 

You might not notice them, but VMs are working behind the scenes every time you interact with decentralized applications (DApps).

If you’re using a Decentralized Finance (DeFi) application like Uniswap to swap tokens, your transactions are being handled by smart contracts running inside the EVM.

If you’re minting an NFT, the VM is running the code that keeps track of who owns each NFT. When you make a purchase or transfer, the VM updates the records so ownership of the NFT stays accurate.

If you’re using a Layer 2 rollup, your transactions may be carried out by a specialized VM, such as a zkEVM. zkEVMs make it possible for zk-rollups to run smart contracts while benefiting from zero-knowledge proofs (ZKP).  

Limitations of VMs

1. Performance overhead: VMs add an extra layer between the hardware and the code being executed. This can slow things down or require more computing resources compared to running apps directly on a physical machine.

2. Operational complexity: Maintaining VMs (especially across cloud infrastructure or blockchain networks) takes a lot of effort to set up and update. This will take time and often requires specialized tools and knowledge.

3. Compatibility: Smart contracts are often designed for a specific VM environment. Code written for smart contracts on Ethereum will need to be rewritten or adapted to work on other non-compatible blockchains like Solana. This means developers need to spend extra time and effort if they want to launch the same app on multiple environments.

Closing Thoughts

VMs play an important role in how both regular computers and blockchain systems operate. They let you run different operating systems, test software safely, and use the same hardware for multiple tasks. 

Virtual machines are also used in blockchain networks to power smart contracts and decentralized apps. Even if you are not an expert, knowing how VMs work can give you a better sense of what’s happening under the hood in many of the DeFi tools and platforms we use.

Further Reading

What Are Modular Blockchains?

What Are Bitcoin Layer 2 Networks?

What Is a Smart Contract Security Audit?

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