Smart Contracts – Kaspa FAQ

KaspaEVM

What is EVM Compatibility?

EVM stands for Ethereum Virtual Machine. It powers Ethereum smart contracts. Once smart contracts arrive, Kaspa will be able to run Ethereum dApps better than Ethereum itself with EVM-Compatibility.

Kaspa is designed for speed and scalability, using a unique structure called a blockDAG (Directed Acyclic Graph) instead of a traditional linear blockchain like Bitcoin or Ethereum. This allows Kaspa to process transactions much faster, you already know this part, while maintaining a proof-of-work (PoW) consensus mechanism for security, also that means Kaspa doesn’t natively support smart contracts or any kind of programmable functionality. EVM is essentially the engine that powers Ethereum’s smart contracts. It’s a virtual environment that runs code (written in languages like Solidity). Smart contracts enable applications (dapps) think DeFi platforms, NFTs, or automated agreements/lending protocols) which have driven Ethereum’s massive ecosystem.

Given the success of EVMs, many blockchains have adopted EVM compatibility because it allows developers to easily port over Ethereum-based dApps and tap into an existing pool of tools and code. Coming back to Kaspa - Kaspa’s native L1 doesn’t have this programmability built in. It’s lean and focused on being a fast, secure and decentralized layer, but to expand use cases Kaspa will benefit massively from Layer 2 solution such as Igra labs that adds features like smart contracts. This is where EVM comes in. An EVM-compatible Layer 2 on Kaspa would mean adding a separate layer that can run Ethereum-style smart contracts while still leveraging Kaspa’s fast and secure L1 for transaction processing and settlement (in Igra’s case - Based Rollups for sequencing / proposing) You know to grow Kaspa’s ecosystem speed alone isn’t enough. Developers and users want functionality—things like decentralized finance (DeFi), token creation, or supply chain tracking—which require smart contracts.

Without them, Kaspa risks being limited to a niche, even with its impressive transaction throughput. By integrating EVM on an L2, Kaspa could attract developers who already know how to build on Ethereum, letting them bring their dApps to Kaspa with minimal changes. This “plug-and-play” aspect is huge because it lowers the barrier to entry and taps into Ethereum’s massive developer community. Second, EVM compatibility could make Kaspa interoperable with other EVM-based chains (like Polygon, Arbitrum, or BNB Chain). This means assets and applications could move more easily between Kaspa and these networks, boosting its ecosystem. (Source: @XXIM via X: https://x.com/xximpod/status/1895443476508299739)

EVM image from ETH website: https://x.com/KaspaFacts/status/1895420949140520977

Igra Labs

What is IgraLabs doing with Kaspa?

They're building an EVM-compatible programmability layer on top of Kaspa BlockDAG. Igra's endgame is to deliver a platform that combines Bitcoin-grade security with the versatility of modern programmable chains.

In their own words: "We aim to unify any kind of decentralized VMs under one roof, making them secure, ultra-fast, MEV-resistant and interoperable. Although existing blockchain programmability layers have achieved significant adoption, we see they are deadlocked by compromises made in terms of scalability, decentralization, and security. We believe this is an inevitable consequence of choosing PoS as the core consensus principle and settling for a technical roadmap that promotes endless fragmentation. This approach merely produces variations of the same technological stack, offering little to no benefit for users, institutions, or retail participants alike. Until recently, technological limitations prevented integrating modern VMs with PoW-based systems.

While BitVM and zkVMs have made Bitcoin ZK rollups possible, native ZK verification on Bitcoin lacks a clear timeline. Even when implemented, these rollups can only use Bitcoin's base layer for settlement, lacking data availability and sequencing capabilities. Ethereum's rollup-centric model has trapped its ecosystem in iterative prisoner's dilemma games, resulting in fragmented liquidity, limited scaling, and distorted economic incentives for base layer development. Kaspa BlockDAG represents an attempt to surpass the limits of Nakamoto consensus. It prioritizes rapid transaction inclusion and control over transaction ordering in the ledger. Kaspa's vision is to create a ledger that operates at network speed limits, with an architecture supporting a programmability layers that inherits both the speed and security of its base layer. By establishing transaction ordering at L1 and deterministically derive the L2 state directly from the base layer, it eliminates the need for additional consensus mechanisms.

This approach combines the best of all existing architectures: Bitcoin, Ethereum (rollup-centric roadmap), an Internet-speed version of Nakamoto base layer, a zk-based computation layer, and a Solana-like unified defragmented state. We see this as a unique opportunity to build a new type of programmable system, one that transcends the limitations of its predecessors. Like its Aramaic meaning of "Rooftop", Igra aims to be the unifying layer under which different decentralized virtual machines can thrive. We see this as a unique opportunity to build a new type of programmable system, one that transcends the limitations of its predecessors. Like its Aramaic meaning of "Rooftop," Igra aims to be the unifying layer under which different decentralized virtual machines can thrive.

First, we plan to build an L2 on top of Kaspa, with a canonical bridge between L1 and L2, supporting up to 3,000 TPS with sub-second finality. It will be EVM-compatible, enabling seamless use of existing Ethereum tools. We believe MEV-resistance is essential to align economic incentives between L2 and L1. Kaspa L1's scalable leaderless DAG design with intra-round mechanism will establish a fair auction system through parallel block creation, preventing transaction reordering. This architecture will serve as the foundation for Igra L2's inherent protection against MEV. And this is only the beginning. By leveraging Kaspa's planned support for synchronous atomic composability, Igra will enable interoperability between systems with any type of VM—whether Solana VM, Move, or WASM. Igra will allow smart contracts to interact seamlessly across different L2s, regardless of which virtual machine they use. This enables a completely new type of composability.

Similar to how an operating system runs programs in any language that can communicate and share state, specialized smart contracts in different languages can be composed into powerful meta-dApps. By leveraging Kaspa L1's sequencing and messaging protocol, Igra delivers an unprecedented combination of scalability, security, and interoperability. This empowers builders to create unstoppable, real-time, censorship-resistant and infinitely composable applications that expand Satoshi's original vision of trustless electronic money into a truly trustless and scalable digital economy."

Source: https://x.com/Igra_Labs/status/1891037264970449314