Network-Enhanced Virtual Machine (NEVM)

and Related Changes to the Syscoin platform

NEVM brings EVM and scalable smart contracts to the Syscoin ecosystem. This article explains what this means, the advantages of NEVM, and dives into important core changes necessary in order for our developers to implement NEVM on the Syscoin platform. It is important for the Syscoin Community, and for anyone who has an interest in Syscoin, to sufficiently understand these changes.

What are Virtual Machines?

Ethereum pioneered the virtual machine, which is essentially a processing machine for Ethereum-based smart contracts. A smart contract can range from a basic ERC20 token to a more sophisticated piece of code that underpins a decentralized application in this context.

The Ethereum Virtual Engine (EVM) offers a layer of abstraction between the smart contract code and the Ethereum network's machine that executes it. Most Ethereum smart contracts are written in Solidity, a programming language created by Dr. Gavin Wood, one of Ethereum’s founders. EVM will also provide support for eWasm (Ethereum WebAssembly) which will enable smart contracts to be coded in various languages including C, C++, and more, which can be trans compiled and executed.

The EVM does not directly execute code. Instead, the code is compiled into opcodes when a smart contract developer is ready to deploy it. Opcodes are a collection of 141 unique instructions that the EVM employs to carry out activities depending on the coded instructions in the smart contract.

Each opcode has a fixed gas cost; however, some may also have a dynamic gas cost. The computational effort required to perform any given transaction on the Ethereum network is measured in gas, which in turn is used to calculate transaction fees in combination with the current demands, i.e. “traffic”, on the Ethereum network.

Turing-completeness refers to a computer's capacity to tackle every solvable issue. The EVM's 141 opcodes, meant to calculate every situation, was meant to be Turing-complete in theory. On a practical level, however, the EVM isn't truly Turing-complete since the amount of gas available limits every computation.

Importance of Virtual Machines

EVM introduced the world to the concept of decentralized smart contracts and conditional transactions which Bitcoin was unable to provide. The conditions for these transactions (the smart contracts), and execution of them by EVM, elevated blockchain tech beyond the very limited uses of secure value storage and transactionality (simple value transfer), to serve as a decentralized computer.

The EVM is not without flaws. The most glaring example of this for the Ethereum network is that, due to design, it is not scalable. This means that as demand grows the network is unable to consistently provide reasonable transaction costs and fulfillment time. Ethereum is pursuing a proof-of-stake security system with the aim of addressing this, but it comes at a great cost; proof-of-stake is inherently less secure, and less proven (academically and in the real world) than proof-of-work.

What is Syscoin’s Network-Enhanced Virtual Machine (NEVM)?

Syscoin NEVM is designed to provide smart contracts and interoperability that can scale to smart cities and beyond, while remaining low-cost and performant, and providing robust decentralized settlements that are secured by Bitcoin’s own proof-of-work security model via merged-mining. Blockchain users and market participants will increasingly realize the importance of proven security, especially as the risks of sundry experimental security models “come home to roost”. Furthermore, once Ethereum shifts to proof-of-stake, other proof-of-stake computation platforms will move closer to becoming superfluous, while Syscoin’s security will continue to be relevant.

With NEVM, Syscoin will essentially combine the strongest elements of Bitcoin (security model, merge-mined hashrate potential, UTXO efficiency and compatibility with future UTXO advancements) with Ethereum (broad usefulness of generalized computation), into a single decentralized coordinated financial computation platform. Syscoin will also improve upon both aspects. For example, on the UTXO side, chainlocks will address Bitcoin’s long-standing “selfish mining” vulnerability and harden the network against reorg impact after a chain lock is established which usually takes up to a minute after each block. On the NEVM side, we will implement zero-knowledge proofs to offer scalability and trustless interoperability for Turing-complete smart contracts. The chainlock’s mechanism gives a finality guarantee which is the desired effect of sharding and proof-of-stake on Ethereum 2.0. With finality we can achieve better constraints for usable rollup designs such as optimistic roll ups, which require a wait period of two weeks on Ethereum mainnet and can be much less on Syscoin due to new finality guarantees that chainlocks provide. On Syscoin the contracts would only have to wait hours on such designs and with the use of zero-knowledge proofs in zkRollups these withdrawal delays can be eliminated entirely.

Advantages of NEVM

  • Smart contracts can scale to an arbitrary number of transactions using a blockchain that provides concise proofs of one-time executions which can be validated in parallel, instead of re-executing them.
  • A decentralized cost model that leads to a significantly more efficient market for gas fees
  • Sublinear, reliable, fault-tolerant blockchain with interactive data availability
  • Trustless cross-chain interoperability is generalized for easy integration with various blockchains, in a way that provides far less cost and technical overhead compared to SysEthereum v1.
  • A coordinated platform with optimal features for easy value transfer, store-of-value, and generalized computing, while retaining concern separation and scalability
  • The security of merged-mining the most reliable PoW network, tapping into most significant hashrate resource available: Bitcoin
  • Finality guarantee through chainlocks, which is based on the security of validators holding some amount of coins mined via PoW and participating in a supermajority of consensus on the current chain tip. This is free from the shortcomings of Proof-Of-Stake and especially the “nothing-at-stake”, which involves validators that are providing consensus without the backing of real sunk costs (energy, infrastructure). In the event a supermajority is not established, the chainlock mechanism resolves back down to regular bitcoin-type policy.


Changes to Syscoin for NEVM

Some changes to Syscoin are necessary in order to implement NEVM and for NEVM to operate optimally into the future. Each item is thoroughly explained below.

Change 1: Adjust the SYS mainchain blocktime in order to optimize chainlocks

Raising the block target from 1 minute to 2.5 minutes will give the network more time to propagate and validate blocks and help ensure the accuracy of chainlocks created by quorums. This block target increase aligns with the purpose of Syscoin’s base layer as a court-of-record; having a short block target is not highly relevant to Syscoin’s approach which uses L2 for full scalability and optional probabilistic security for fast fulfillment of UTXO token transfers. At the same time, we don’t want to increase blocktime beyond what is necessary for proper chainlocks. 2.5 minutes is close to optimal.

Change 2: Introduce EIP-1559

The two main uses of blockchain tech are secure store-of-value (Bitcoin) and utility (chains like NEVM and Ethereum). The coin supply of a blockchain at any given time must be suitable for service providers (miners and other incentivized nodes) and for users to cover fees to redeem services. It has become clear to Syscoin’s core developers that the SYS network is best served by a dynamic coin supply that factors service demand as a deflationary element, and provides for an indefinitely functional service-based economy. We aim to implement EIP-1559 (fee burning of SYS, elimination of the max supply cap on SYS, and the introduction of dynamic blocksize), to increase Syscoin’s usefulness, adoptability and long-term viability as a utility-focused platform. EIP-1559 is most appropriate for Syscoin’s economy of utility, while the more simplistic hard-capped supply and hard-capped blocksize are more appropriate for the narrow scenario of secure store-of-value (Bitcoin). 

EIP-1559 will burn the base gas fees spent on NEVM. A priority fee will be paid out to Bitcoin miners and other SHA-256 miners who mine NEVM. This will introduce a dynamic model; Fee burning is deflationary, while NEVM miner rewards and ongoing masternode rewards are inflationary. There will be a max inflation of roughly 1.25% a year. In reality, inflation will be lower than 1.25% due to fees being burned and that not all masternodes will have full seniority.


  • A utility-based economic model Ethereum users are accustomed to, which can operate in perpetuity
  • Subsidies for masternode owners/operators will continue indefinitely instead of being cut-off when a supply cap is reached. This helps ensure Syscoin will continue to have a strong network of many full nodes into the distant future.
  • Appropriate service and appropriate fees on L1 in any condition, in part because blocksize limits will dynamically increase beyond a baseline or decrease towards a baseline, according to real demand
  • The SYS inflation rate can range close to the projected rate of world population growth


SYS Mainchain Rewards & Payouts

Rewards and payouts will be quantifiably identical to current payouts, but will be paid according to 2.5 minute blocks instead of 1 minute.


Base: 2.5 minutes x 23.45 = 58.62 SYS per payout
1 year Seniority: 2.5 minutes x 31.66 = 79.15 SYS per payout
2.5 year Seniority: 2.5 minutes x 46.9 = 117.25 SYS per payout


2.5 minutes x 7.81 SYS = 19.52 SYS per payout

The above numbers will deflate 5% each year.

Miner rewards and governance payouts reach zero on the SYS mainchain through deflation. Masternode payouts deflate until the base payment amount reaches 5.275 SYS (10.55 with full seniority). This is done to ensure the long term health and safety (liveness) assurances of the network of full nodes, as the subsidy winds down.

NEVM Chain Rewards

Bitcoin miners and other SHA-256 miners that mine the NEVM chain will receive a static amount of 10.55 SYS per block. In addition, they can receive priority fees, if set by the sender.

Governance Proposals & New White Paper 

Decentralized governance will continue to remain a key element for determining Syscoin’s direction as a project. We are currently making four separate governance proposals to be voted on by our masternode operators that, if passed, would enable us to dedicate more SYS to growing the platform. 

A new Syscoin white paper is near completion. It will include information on the above topics, NEVM, and more. Its finalization and release are pending the voting results on the proposals mentioned above.

UPDATE: November 20, 2021

During the decentralized governance vote of superblock 29, Proposal 5 was brought forward by the community, and was voted-in by the community's masternode owners. According to these voting results, the Syscoin community has chosen to allocate a one-time mint of 100 Million SYS to Syscoin Foundation. These funds will be used by Syscoin Foundation for development, TVL incentives to foster the growth of the ecosystem, marketing, and to enable strategic partnerships.

There will be no changes to the existing governance superblock schedule or amounts. 

Our new Syscoin 4 Whitepaper will be available soon. It will provide a deeper dive into the tokenomics and changes mentioned in this blogpost.

NEVM Roadmap

Step 1: PoW Smart Contracts, Q4 2021

The initial NEVM mainnet release will establish Layer 1 support for EVM and smart contracts, a trustless SYS <-> NEVM bridge, a load balanced RPC gateway, and what is needed to advance and upgrade the network further. At this early stage, NEVM itself will operate at speeds comparable to other EVMs, but with longer blocktimes due Syscoin’s proof-of-work commitment. Scaling solutions for faster fulfillment speeds have already been proposed and will be released in subsequent steps.

Step 2: Rapid Speed via ZK-Rollups, Q1 2022

Shortly after the deployment of Layer 1 NEVM, we will introduce Layer 2 with zk-rollups. This will enable smart contracts to scale up to 210,000 TPS*. At this stage our smart contract platform will exceed the speed of other EVMs, while keeping fees minimal, and will accomplish these while retaining the inherent security of Bitcoin’s security model and miners.

Step 3: Validium, Q3 2022 

This stage will fulfill the technical vision for NEVM outlined by our lead developer, Jag Sidhu, in his peer-reviewed paper, * “A Design For An Efficient Coordinated Financial Computing Platform”, in which he outlines how NEVM will be able to reach speeds of up to 4 million TPS. This will serve as the lynchpin for a platform like no other that will be able to meet the Web 3.0 needs and structural demands of global mass adoption.

NEVM is Live on our Tanenbaum Public Testnet

Follow this guide to setup Metamask


Join the testnet channel in the official Syscoin Discord for more details.


Please reach out to us in the official Syscoin Discord if you have questions about these changes or simply want to discuss them.

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Oct 7, 2021 by Syscoin Foundation