State

What is a blockchain state?

In blockchain technology, the state represents the current status of all data maintained by the blockchain at a specific time. This includes details like account balances, smart contract storage, and the values of other variables that define the blockchain’s overall condition. The state is continuously updated as new transactions are processed, ensuring that the blockchain accurately reflects the latest changes.

Account balances represent the tokens or assets held by each address. Variables like transaction counters, gas usage, and storage pointers shape a blockchain’s state by recording network activity results and smart contract operations. Smart contract storage ensures contracts function properly by managing the data and variables they rely on.

What does state do?

The blockchain state is the authoritative record of all activities on-chain and is updated whenever transactions are executed and confirmed. Each new block added to the blockchain modifies its state by incorporating all transaction data in that block.

Trust in the state is ensured through cryptographic hashes and consensus mechanisms. Each block includes a hash of the previous one, forming a chain that makes tampering easily detectable. Consensus algorithms use “sybil resistance” mechanisms like Proof of Work (PoW) or Proof of Stake (PoS), and chain selection rules like “longest chain” to help ensure the network agrees on the current state before updates are validated. 

These processes make the blockchain state secure, reliable, and trusted by participants.

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How is the blockchain state used, and why?

Developers, validators, end users, and security researchers  all interact with the blockchain state for different reasons:

• Developers use the state when writing and deploying smart contracts because it determines how contracts behave at any point. For instance, a decentralized voting smart contract might check the state to verify whether a user has already cast their vote. If the state indicates the user has voted, the contract will prevent them from voting again.
• Validators verify transactions that modify the state, ensuring updates are correct and comply with protocol rules. They check that transactions follow a blockchain’s consensus rules, such as verifying digital signatures to confirm the sender’s identity and ensuring a sender has enough balance to complete the transaction. They also validate that transaction data hasn't been tampered with by comparing cryptographic hashes. Only when all checks are passed is the transaction added to a block, and the state updated.
• End users rely on the blockchain state to track the outcomes of their interactions, such as checking account balances or verifying ownership of assets. They use tools like blockchain explorers (e.g., Etherscan, Blockscout) or wallet apps (e.g., MetaMask, Rabby, Phantom) to access real-time information about their holdings and transaction history.
• Security researchers analyze the blockchain state to identify vulnerabilities and potential exploits. They examine transaction history, smart contract states, and protocol updates to detect irregularities, weaknesses, or malicious activities.

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Use cases for state

The state is central to all operations within a blockchain ecosystem, especially in platforms that support smart contracts like Ethereum, ZKsync, and Arbitrum. Specific use cases include:

• Tracking balances: The blockchain state records the amount of digital assets any wallet holds.
• Smart contract execution: Smart contracts rely on a blockchain's state to manage business logic and execute code based on stored data. This includes account balances, token ownership, and other contract-specific details the smart contract reads, modifies, or updates during execution.
• Token standards (e.g., ERC-20, ERC-721): The blockchain state records ownership and transfer data for tokens, while compliance with token standards is enforced by the smart contract logic that manages how tokens are created, transferred, and governed.
• DeFi applications: Decentralized finance (DeFi) applications use a blockchain’s state to manage loans, staking, and yield farming by keeping records of deposits and earnings.

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How blockchains store and manage state data

Blockchains use specialized data structures to store and manage state data efficiently, ensuring security and reliability. These structures make it possible to verify data quickly, keep transaction records consistent, and provide access to historical data. Below are the some components that handle state data storage in blockchain networks:

• Merkle trees
  • Structure data in a tree-like form with cryptographic hashes.
  • Allows quick verification of data without checking every piece individually.
  • Commonly used to verify transactions, blocks, and state changes.
• Patricia tries
  • A variation of Merkle trees designed for key-value storage.
  • Efficiently organizes data for fast lookups and updates.
  • Manages data like account balances and contract states in Ethereum.
• Key-Value stores
  • Stores data as a simple pair: a unique key and its associated value.
  • Used to manage information like account balances or contract data.
• State databases
  • Long-term storage.
  • Store the full blockchain state and allow quick access to recent data.

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In practice (for testing)

Blockchain state plays an important role in the development and testing of smart contracts and decentralized applications to ensure consistent and predictable outcomes:

• Unit tests validate how individual functions behave by observing changes to the state.
• Integration tests confirm that state transitions work correctly across different parts of the application.‍
• Simulation tools such as Foundry, Hardhat, and Moccasin create blockchain environments that allow developers to observe the state before and after specific actions, ensuring correctness.