diff --git a/README.md b/README.md
index 2627bc85e..f6bcaad28 100644
--- a/README.md
+++ b/README.md
@@ -6,7 +6,7 @@ Ethereum
 Ethereum Go Development package (C) Jeffrey Wilcke
 
 Ethereum is currently in its testing phase. The current state is "Proof
-of Concept 5.0 RC6". For build instructions see the [Wiki](https://github.com/ethereum/go-ethereum/wiki/Building-Ethereum(Go)).
+of Concept 5.0 RC7". For build instructions see the [Wiki](https://github.com/ethereum/go-ethereum/wiki/Building-Ethereum(Go)).
 
 Ethereum Go is split up in several sub packages Please refer to each
 individual package for more information.
diff --git a/ethchain/block.go b/ethchain/block.go
index aac50ccb1..c6c2c1226 100644
--- a/ethchain/block.go
+++ b/ethchain/block.go
@@ -4,6 +4,7 @@ import (
 	"fmt"
 	"github.com/ethereum/eth-go/ethutil"
 	"math/big"
+	"strconv"
 	"time"
 )
 
@@ -40,6 +41,14 @@ type Block struct {
 	Difficulty *big.Int
 	// Creation time
 	Time int64
+	// The block number
+	Number *big.Int
+	// Minimum Gas Price
+	MinGasPrice *big.Int
+	// Gas limit
+	GasLimit *big.Int
+	// Gas used
+	GasUsed *big.Int
 	// Extra data
 	Extra string
 	// Block Nonce for verification
@@ -122,7 +131,7 @@ func (block *Block) Transactions() []*Transaction {
 }
 
 func (block *Block) PayFee(addr []byte, fee *big.Int) bool {
-	contract := block.state.GetContract(addr)
+	contract := block.state.GetStateObject(addr)
 	// If we can't pay the fee return
 	if contract == nil || contract.Amount.Cmp(fee) < 0 /* amount < fee */ {
 		fmt.Println("Contract has insufficient funds", contract.Amount, fee)
@@ -206,7 +215,12 @@ func (block *Block) SetUncles(uncles []*Block) {
 func (block *Block) SetTransactions(txs []*Transaction) {
 	block.transactions = txs
 
-	block.TxSha = ethutil.Sha3Bin(ethutil.Encode(block.rlpTxs()))
+	trie := ethutil.NewTrie(ethutil.Config.Db, "")
+	for i, tx := range txs {
+		trie.Update(strconv.Itoa(i), string(tx.RlpEncode()))
+	}
+
+	block.TxSha = trie.Root.([]byte)
 }
 
 func (block *Block) Value() *ethutil.Value {
@@ -233,9 +247,13 @@ func (block *Block) RlpValueDecode(decoder *ethutil.Value) {
 	block.state = NewState(ethutil.NewTrie(ethutil.Config.Db, header.Get(3).Val))
 	block.TxSha = header.Get(4).Bytes()
 	block.Difficulty = header.Get(5).BigInt()
-	block.Time = int64(header.Get(6).BigInt().Uint64())
-	block.Extra = header.Get(7).Str()
-	block.Nonce = header.Get(8).Bytes()
+	block.Number = header.Get(6).BigInt()
+	block.MinGasPrice = header.Get(7).BigInt()
+	block.GasLimit = header.Get(8).BigInt()
+	block.GasUsed = header.Get(9).BigInt()
+	block.Time = int64(header.Get(10).BigInt().Uint64())
+	block.Extra = header.Get(11).Str()
+	block.Nonce = header.Get(12).Bytes()
 	block.contractStates = make(map[string]*ethutil.Trie)
 
 	// Tx list might be empty if this is an uncle. Uncles only have their
@@ -270,21 +288,21 @@ func NewUncleBlockFromValue(header *ethutil.Value) *Block {
 	block.state = NewState(ethutil.NewTrie(ethutil.Config.Db, header.Get(3).Val))
 	block.TxSha = header.Get(4).Bytes()
 	block.Difficulty = header.Get(5).BigInt()
-	block.Time = int64(header.Get(6).BigInt().Uint64())
-	block.Extra = header.Get(7).Str()
-	block.Nonce = header.Get(8).Bytes()
+	block.Number = header.Get(6).BigInt()
+	block.MinGasPrice = header.Get(7).BigInt()
+	block.GasLimit = header.Get(8).BigInt()
+	block.GasUsed = header.Get(9).BigInt()
+	block.Time = int64(header.Get(10).BigInt().Uint64())
+	block.Extra = header.Get(11).Str()
+	block.Nonce = header.Get(12).Bytes()
 
 	return block
 }
 
-func (block *Block) String() string {
-	return fmt.Sprintf("Block(%x):\nPrevHash:%x\nUncleSha:%x\nCoinbase:%x\nRoot:%x\nTxSha:%x\nDiff:%v\nTime:%d\nNonce:%x\nTxs:%d\n", block.Hash(), block.PrevHash, block.UncleSha, block.Coinbase, block.state.trie.Root, block.TxSha, block.Difficulty, block.Time, block.Nonce, len(block.transactions))
-}
 func (block *Block) GetRoot() interface{} {
 	return block.state.trie.Root
 }
 
-//////////// UNEXPORTED /////////////////
 func (block *Block) header() []interface{} {
 	return []interface{}{
 		// Sha of the previous block
@@ -299,6 +317,14 @@ func (block *Block) header() []interface{} {
 		block.TxSha,
 		// Current block Difficulty
 		block.Difficulty,
+		// The block number
+		block.Number,
+		// Block minimum gas price
+		block.MinGasPrice,
+		// Block upper gas bound
+		block.GasLimit,
+		// Block gas used
+		block.GasUsed,
 		// Time the block was found?
 		block.Time,
 		// Extra data
@@ -307,3 +333,36 @@ func (block *Block) header() []interface{} {
 		block.Nonce,
 	}
 }
+
+func (block *Block) String() string {
+	return fmt.Sprintf(`
+	BLOCK(%x):
+	PrevHash:   %x
+	UncleSha:   %x
+	Coinbase:   %x
+	Root:       %x
+	TxSha:      %x
+	Difficulty: %v
+	Number:     %v
+	MinGas:     %v
+	MaxLimit:   %v
+	GasUsed:    %v
+	Time:       %v
+	Extra:      %v
+	Nonce:      %x
+`,
+		block.Hash(),
+		block.PrevHash,
+		block.UncleSha,
+		block.Coinbase,
+		block.state.trie.Root,
+		block.TxSha,
+		block.Difficulty,
+		block.Number,
+		block.MinGasPrice,
+		block.GasLimit,
+		block.GasUsed,
+		block.Time,
+		block.Extra,
+		block.Nonce)
+}
diff --git a/ethchain/block_chain.go b/ethchain/block_chain.go
index 2be4cd92b..2865336fb 100644
--- a/ethchain/block_chain.go
+++ b/ethchain/block_chain.go
@@ -70,6 +70,22 @@ func (bc *BlockChain) NewBlock(coinbase []byte, txs []*Transaction) *Block {
 		diff.Mul(diff, mul)
 		diff.Add(diff, bc.CurrentBlock.Difficulty)
 		block.Difficulty = diff
+
+		block.Number = new(big.Int).Add(bc.CurrentBlock.Number, ethutil.Big1)
+
+		// max(10000, (parent gas limit * (1024 - 1) + (parent gas used * 6 / 5)) / 1024)
+		base := new(big.Int)
+		base2 := new(big.Int)
+		parentGL := bc.CurrentBlock.GasLimit
+		parentUsed := bc.CurrentBlock.GasUsed
+
+		base.Mul(parentGL, big.NewInt(1024-1))
+		base2.Mul(parentUsed, big.NewInt(6))
+		base2.Div(base2, big.NewInt(5))
+		base.Add(base, base2)
+		base.Div(base, big.NewInt(1024))
+
+		block.GasLimit = ethutil.BigMax(big.NewInt(10000), base)
 	}
 
 	return block
@@ -127,7 +143,6 @@ func (bc *BlockChain) FindCanonicalChain(blocks []*Block, commonBlockHash []byte
 			log.Println("[CHAIN] We have found the common parent block, breaking")
 			break
 		}
-		log.Println("Checking incoming blocks:")
 		chainDifficulty.Add(chainDifficulty, bc.CalculateBlockTD(block))
 	}
 
@@ -182,6 +197,7 @@ func (bc *BlockChain) ResetTillBlockHash(hash []byte) error {
 	// XXX Why are we resetting? This is the block chain, it has nothing to do with states
 	//bc.Ethereum.StateManager().PrepareDefault(returnTo)
 
+	// Manually reset the last sync block
 	err := ethutil.Config.Db.Delete(lastBlock.Hash())
 	if err != nil {
 		return err
@@ -261,13 +277,14 @@ func AddTestNetFunds(block *Block) {
 		"1e12515ce3e0f817a4ddef9ca55788a1d66bd2df", // Vit
 		"1a26338f0d905e295fccb71fa9ea849ffa12aaf4", // Alex
 		"2ef47100e0787b915105fd5e3f4ff6752079d5cb", // Maran
+		"cd2a3d9f938e13cd947ec05abc7fe734df8dd826", // Roman
 	} {
-		//log.Println("2^200 Wei to", addr)
 		codedAddr := ethutil.FromHex(addr)
 		account := block.state.GetAccount(codedAddr)
 		account.Amount = ethutil.BigPow(2, 200)
 		block.state.UpdateStateObject(account)
 	}
+	log.Printf("%x\n", block.RlpEncode())
 }
 
 func (bc *BlockChain) setLastBlock() {
@@ -279,7 +296,7 @@ func (bc *BlockChain) setLastBlock() {
 		bc.LastBlockHash = block.Hash()
 		bc.LastBlockNumber = info.Number
 
-		log.Printf("[CHAIN] Last known block height #%d\n", bc.LastBlockNumber)
+		ethutil.Config.Log.Infof("[CHAIN] Last known block height #%d\n", bc.LastBlockNumber)
 	} else {
 		AddTestNetFunds(bc.genesisBlock)
 
@@ -294,7 +311,7 @@ func (bc *BlockChain) setLastBlock() {
 	// Set the last know difficulty (might be 0x0 as initial value, Genesis)
 	bc.TD = ethutil.BigD(ethutil.Config.Db.LastKnownTD())
 
-	log.Printf("Last block: %x\n", bc.CurrentBlock.Hash())
+	ethutil.Config.Log.Infof("Last block: %x\n", bc.CurrentBlock.Hash())
 }
 
 func (bc *BlockChain) SetTotalDifficulty(td *big.Int) {
diff --git a/ethchain/block_chain_test.go b/ethchain/block_chain_test.go
index 30eb62266..4e4bb9dd4 100644
--- a/ethchain/block_chain_test.go
+++ b/ethchain/block_chain_test.go
@@ -18,6 +18,18 @@ type TestManager struct {
 	Blocks     []*Block
 }
 
+func (s *TestManager) IsListening() bool {
+	return false
+}
+
+func (s *TestManager) IsMining() bool {
+	return false
+}
+
+func (s *TestManager) PeerCount() int {
+	return 0
+}
+
 func (s *TestManager) BlockChain() *BlockChain {
 	return s.blockChain
 }
@@ -38,7 +50,7 @@ func (tm *TestManager) Broadcast(msgType ethwire.MsgType, data []interface{}) {
 }
 
 func NewTestManager() *TestManager {
-	ethutil.ReadConfig(".ethtest")
+	ethutil.ReadConfig(".ethtest", ethutil.LogStd)
 
 	db, err := ethdb.NewMemDatabase()
 	if err != nil {
@@ -62,8 +74,7 @@ func NewTestManager() *TestManager {
 func (tm *TestManager) AddFakeBlock(blk []byte) error {
 	block := NewBlockFromBytes(blk)
 	tm.Blocks = append(tm.Blocks, block)
-	tm.StateManager().PrepareDefault(block)
-	err := tm.StateManager().ProcessBlock(block, false)
+	err := tm.StateManager().ProcessBlock(tm.StateManager().CurrentState(), block, false)
 	return err
 }
 func (tm *TestManager) CreateChain1() error {
diff --git a/ethchain/dagger.go b/ethchain/dagger.go
index 9d2df4069..18e53d3a8 100644
--- a/ethchain/dagger.go
+++ b/ethchain/dagger.go
@@ -29,14 +29,14 @@ func (pow *EasyPow) Search(block *Block, reactChan chan ethutil.React) []byte {
 	for {
 		select {
 		case <-reactChan:
-			log.Println("[POW] Received reactor event; breaking out.")
+			ethutil.Config.Log.Infoln("[POW] Received reactor event; breaking out.")
 			return nil
 		default:
 			i++
 			if i%1234567 == 0 {
 				elapsed := time.Now().UnixNano() - start
 				hashes := ((float64(1e9) / float64(elapsed)) * float64(i)) / 1000
-				log.Println("[POW] Hashing @", int64(hashes), "khash")
+				ethutil.Config.Log.Infoln("[POW] Hashing @", int64(hashes), "khash")
 			}
 
 			sha := ethutil.Sha3Bin(big.NewInt(r.Int63()).Bytes())
diff --git a/ethchain/genesis.go b/ethchain/genesis.go
index 935978a69..b8f9f865a 100644
--- a/ethchain/genesis.go
+++ b/ethchain/genesis.go
@@ -15,7 +15,6 @@ var EmptyShaList = ethutil.Sha3Bin(ethutil.Encode([]interface{}{}))
 
 var GenesisHeader = []interface{}{
 	// Previous hash (none)
-	//"",
 	ZeroHash256,
 	// Sha of uncles
 	ethutil.Sha3Bin(ethutil.Encode([]interface{}{})),
@@ -23,15 +22,22 @@ var GenesisHeader = []interface{}{
 	ZeroHash160,
 	// Root state
 	"",
-	// Sha of transactions
-	//EmptyShaList,
-	ethutil.Sha3Bin(ethutil.Encode([]interface{}{})),
+	// tx sha
+	ZeroHash256,
 	// Difficulty
 	ethutil.BigPow(2, 22),
+	// Number
+	ethutil.Big0,
+	// Block minimum gas price
+	ethutil.Big0,
+	// Block upper gas bound
+	big.NewInt(1000000),
+	// Block gas used
+	ethutil.Big0,
 	// Time
-	int64(0),
+	ethutil.Big0,
 	// Extra
-	"",
+	nil,
 	// Nonce
 	ethutil.Sha3Bin(big.NewInt(42).Bytes()),
 }
diff --git a/ethchain/state.go b/ethchain/state.go
index d02584d67..63c4a32a6 100644
--- a/ethchain/state.go
+++ b/ethchain/state.go
@@ -49,28 +49,6 @@ func (s *State) Purge() int {
 	return s.trie.NewIterator().Purge()
 }
 
-// XXX Deprecated
-func (s *State) GetContract(addr []byte) *StateObject {
-	data := s.trie.Get(string(addr))
-	if data == "" {
-		return nil
-	}
-
-	// build contract
-	contract := NewStateObjectFromBytes(addr, []byte(data))
-
-	// Check if there's a cached state for this contract
-	cachedState := s.states[string(addr)]
-	if cachedState != nil {
-		contract.state = cachedState
-	} else {
-		// If it isn't cached, cache the state
-		s.states[string(addr)] = contract.state
-	}
-
-	return contract
-}
-
 func (s *State) GetStateObject(addr []byte) *StateObject {
 	data := s.trie.Get(string(addr))
 	if data == "" {
@@ -91,6 +69,21 @@ func (s *State) GetStateObject(addr []byte) *StateObject {
 	return stateObject
 }
 
+// Updates any given state object
+func (s *State) UpdateStateObject(object *StateObject) {
+	addr := object.Address()
+
+	if object.state != nil {
+		s.states[string(addr)] = object.state
+	}
+
+	ethutil.Config.Db.Put(ethutil.Sha3Bin(object.Script()), object.Script())
+
+	s.trie.Update(string(addr), string(object.RlpEncode()))
+
+	s.manifest.AddObjectChange(object)
+}
+
 func (s *State) SetStateObject(stateObject *StateObject) {
 	s.states[string(stateObject.address)] = stateObject.state
 
@@ -116,18 +109,6 @@ func (s *State) Copy() *State {
 	return NewState(s.trie.Copy())
 }
 
-// Updates any given state object
-func (s *State) UpdateStateObject(object *StateObject) {
-	addr := object.Address()
-
-	if object.state != nil {
-		s.states[string(addr)] = object.state
-	}
-
-	s.trie.Update(string(addr), string(object.RlpEncode()))
-	s.manifest.AddObjectChange(object)
-}
-
 func (s *State) Put(key, object []byte) {
 	s.trie.Update(string(key), string(object))
 }
diff --git a/ethchain/state_manager.go b/ethchain/state_manager.go
index 57d56469b..c7c6857d8 100644
--- a/ethchain/state_manager.go
+++ b/ethchain/state_manager.go
@@ -39,20 +39,13 @@ type StateManager struct {
 	// The ethereum manager interface
 	Ethereum EthManager
 	// The managed states
-	// Processor state. Anything processed will be applied to this
-	// state
-	procState *State
-	// Comparative state it used for comparing and validating end
-	// results
-	compState *State
 	// Transiently state. The trans state isn't ever saved, validated and
 	// it could be used for setting account nonces without effecting
 	// the main states.
 	transState *State
-	// Manifest for keeping changes regarding state objects. See `notify`
-	// XXX Should we move the manifest to the State object. Benefit:
-	// * All states can keep their own local changes
-	//manifest *Manifest
+	// Mining state. The mining state is used purely and solely by the mining
+	// operation.
+	miningState *State
 }
 
 func NewStateManager(ethereum EthManager) *StateManager {
@@ -62,30 +55,39 @@ func NewStateManager(ethereum EthManager) *StateManager {
 		Pow:      &EasyPow{},
 		Ethereum: ethereum,
 		bc:       ethereum.BlockChain(),
-		//manifest: NewManifest(),
 	}
-	sm.procState = ethereum.BlockChain().CurrentBlock.State()
-	sm.transState = sm.procState.Copy()
+	sm.transState = ethereum.BlockChain().CurrentBlock.State().Copy()
+	sm.miningState = ethereum.BlockChain().CurrentBlock.State().Copy()
 
 	return sm
 }
 
-func (sm *StateManager) ProcState() *State {
-	return sm.procState
+func (sm *StateManager) CurrentState() *State {
+	return sm.Ethereum.BlockChain().CurrentBlock.State()
 }
 
 func (sm *StateManager) TransState() *State {
 	return sm.transState
 }
 
+func (sm *StateManager) MiningState() *State {
+	return sm.miningState
+}
+
+func (sm *StateManager) NewMiningState() *State {
+	sm.miningState = sm.Ethereum.BlockChain().CurrentBlock.State().Copy()
+
+	return sm.miningState
+}
+
 func (sm *StateManager) BlockChain() *BlockChain {
 	return sm.bc
 }
 
-func (sm *StateManager) MakeContract(tx *Transaction) *StateObject {
-	contract := MakeContract(tx, sm.procState)
+func (sm *StateManager) MakeContract(state *State, tx *Transaction) *StateObject {
+	contract := MakeContract(tx, state)
 	if contract != nil {
-		sm.procState.states[string(tx.Hash()[12:])] = contract.state
+		state.states[string(tx.CreationAddress())] = contract.state
 
 		return contract
 	}
@@ -95,7 +97,7 @@ func (sm *StateManager) MakeContract(tx *Transaction) *StateObject {
 
 // Apply transactions uses the transaction passed to it and applies them onto
 // the current processing state.
-func (sm *StateManager) ApplyTransactions(block *Block, txs []*Transaction) {
+func (sm *StateManager) ApplyTransactions(state *State, block *Block, txs []*Transaction) {
 	// Process each transaction/contract
 	for _, tx := range txs {
 		// If there's no recipient, it's a contract
@@ -104,9 +106,9 @@ func (sm *StateManager) ApplyTransactions(block *Block, txs []*Transaction) {
 		if tx.IsContract() {
 			err := sm.Ethereum.TxPool().ProcessTransaction(tx, block, false)
 			if err == nil {
-				contract := sm.MakeContract(tx)
+				contract := sm.MakeContract(state, tx)
 				if contract != nil {
-					sm.EvalScript(contract.Init(), contract, tx, block)
+					sm.EvalScript(state, contract.Init(), contract, tx, block)
 				} else {
 					ethutil.Config.Log.Infoln("[STATE] Unable to create contract")
 				}
@@ -115,9 +117,10 @@ func (sm *StateManager) ApplyTransactions(block *Block, txs []*Transaction) {
 			}
 		} else {
 			err := sm.Ethereum.TxPool().ProcessTransaction(tx, block, false)
-			contract := sm.procState.GetContract(tx.Recipient)
+			contract := state.GetStateObject(tx.Recipient)
+			ethutil.Config.Log.Debugf("contract recip %x\n", tx.Recipient)
 			if err == nil && len(contract.Script()) > 0 {
-				sm.EvalScript(contract.Script(), contract, tx, block)
+				sm.EvalScript(state, contract.Script(), contract, tx, block)
 			} else if err != nil {
 				ethutil.Config.Log.Infoln("[STATE] process:", err)
 			}
@@ -125,20 +128,8 @@ func (sm *StateManager) ApplyTransactions(block *Block, txs []*Transaction) {
 	}
 }
 
-// The prepare function, prepares the state manager for the next
-// "ProcessBlock" action.
-func (sm *StateManager) Prepare(processor *State, comparative *State) {
-	sm.compState = comparative
-	sm.procState = processor
-}
-
-// Default prepare function
-func (sm *StateManager) PrepareDefault(block *Block) {
-	sm.Prepare(sm.BlockChain().CurrentBlock.State(), block.State())
-}
-
 // Block processing and validating with a given (temporarily) state
-func (sm *StateManager) ProcessBlock(block *Block, dontReact bool) error {
+func (sm *StateManager) ProcessBlock(state *State, block *Block, dontReact bool) error {
 	// Processing a blocks may never happen simultaneously
 	sm.mutex.Lock()
 	defer sm.mutex.Unlock()
@@ -153,7 +144,7 @@ func (sm *StateManager) ProcessBlock(block *Block, dontReact bool) error {
 	// we don't want to undo but since undo only happens on dirty
 	// nodes this won't happen because Commit would have been called
 	// before that.
-	defer sm.bc.CurrentBlock.Undo()
+	defer state.Reset()
 
 	// Check if we have the parent hash, if it isn't known we discard it
 	// Reasons might be catching up or simply an invalid block
@@ -162,7 +153,7 @@ func (sm *StateManager) ProcessBlock(block *Block, dontReact bool) error {
 	}
 
 	// Process the transactions on to current block
-	sm.ApplyTransactions(sm.bc.CurrentBlock, block.Transactions())
+	sm.ApplyTransactions(state, sm.bc.CurrentBlock, block.Transactions())
 
 	// Block validation
 	if err := sm.ValidateBlock(block); err != nil {
@@ -172,35 +163,35 @@ func (sm *StateManager) ProcessBlock(block *Block, dontReact bool) error {
 
 	// I'm not sure, but I don't know if there should be thrown
 	// any errors at this time.
-	if err := sm.AccumelateRewards(block); err != nil {
+	if err := sm.AccumelateRewards(state, block); err != nil {
 		fmt.Println("[SM] Error accumulating reward", err)
 		return err
 	}
 
-	if !sm.compState.Cmp(sm.procState) {
-		return fmt.Errorf("Invalid merkle root. Expected %x, got %x", sm.compState.trie.Root, sm.procState.trie.Root)
+	//if !sm.compState.Cmp(state) {
+	if !block.State().Cmp(state) {
+		return fmt.Errorf("Invalid merkle root. Expected %x, got %x", block.State().trie.Root, state.trie.Root)
 	}
 
 	// Calculate the new total difficulty and sync back to the db
 	if sm.CalculateTD(block) {
 		// Sync the current block's state to the database and cancelling out the deferred Undo
-		sm.procState.Sync()
+		state.Sync()
 
 		// Add the block to the chain
 		sm.bc.Add(block)
+		sm.notifyChanges(state)
 
 		ethutil.Config.Log.Infof("[STATE] Added block #%d (%x)\n", block.BlockInfo().Number, block.Hash())
 		if dontReact == false {
 			sm.Ethereum.Reactor().Post("newBlock", block)
 
-			sm.notifyChanges()
-
-			sm.procState.manifest.Reset()
+			state.manifest.Reset()
 		}
 
 		sm.Ethereum.Broadcast(ethwire.MsgBlockTy, []interface{}{block.Value().Val})
 
-		sm.Ethereum.TxPool().RemoveInvalid(sm.procState)
+		sm.Ethereum.TxPool().RemoveInvalid(state)
 	} else {
 		fmt.Println("total diff failed")
 	}
@@ -276,21 +267,21 @@ func CalculateUncleReward(block *Block) *big.Int {
 	return UncleReward
 }
 
-func (sm *StateManager) AccumelateRewards(block *Block) error {
+func (sm *StateManager) AccumelateRewards(state *State, block *Block) error {
 	// Get the account associated with the coinbase
-	account := sm.procState.GetAccount(block.Coinbase)
+	account := state.GetAccount(block.Coinbase)
 	// Reward amount of ether to the coinbase address
 	account.AddAmount(CalculateBlockReward(block, len(block.Uncles)))
 
 	addr := make([]byte, len(block.Coinbase))
 	copy(addr, block.Coinbase)
-	sm.procState.UpdateStateObject(account)
+	state.UpdateStateObject(account)
 
 	for _, uncle := range block.Uncles {
-		uncleAccount := sm.procState.GetAccount(uncle.Coinbase)
+		uncleAccount := state.GetAccount(uncle.Coinbase)
 		uncleAccount.AddAmount(CalculateUncleReward(uncle))
 
-		sm.procState.UpdateStateObject(uncleAccount)
+		state.UpdateStateObject(uncleAccount)
 	}
 
 	return nil
@@ -300,8 +291,8 @@ func (sm *StateManager) Stop() {
 	sm.bc.Stop()
 }
 
-func (sm *StateManager) EvalScript(script []byte, object *StateObject, tx *Transaction, block *Block) {
-	account := sm.procState.GetAccount(tx.Sender())
+func (sm *StateManager) EvalScript(state *State, script []byte, object *StateObject, tx *Transaction, block *Block) {
+	account := state.GetAccount(tx.Sender())
 
 	err := account.ConvertGas(tx.Gas, tx.GasPrice)
 	if err != nil {
@@ -309,8 +300,8 @@ func (sm *StateManager) EvalScript(script []byte, object *StateObject, tx *Trans
 		return
 	}
 
-	closure := NewClosure(account, object, script, sm.procState, tx.Gas, tx.GasPrice)
-	vm := NewVm(sm.procState, sm, RuntimeVars{
+	closure := NewClosure(account, object, script, state, tx.Gas, tx.GasPrice)
+	vm := NewVm(state, sm, RuntimeVars{
 		Origin:      account.Address(),
 		BlockNumber: block.BlockInfo().Number,
 		PrevHash:    block.PrevHash,
@@ -323,16 +314,16 @@ func (sm *StateManager) EvalScript(script []byte, object *StateObject, tx *Trans
 	closure.Call(vm, tx.Data, nil)
 
 	// Update the account (refunds)
-	sm.procState.UpdateStateObject(account)
-	sm.procState.UpdateStateObject(object)
+	state.UpdateStateObject(account)
+	state.UpdateStateObject(object)
 }
 
-func (sm *StateManager) notifyChanges() {
-	for addr, stateObject := range sm.procState.manifest.objectChanges {
+func (sm *StateManager) notifyChanges(state *State) {
+	for addr, stateObject := range state.manifest.objectChanges {
 		sm.Ethereum.Reactor().Post("object:"+addr, stateObject)
 	}
 
-	for stateObjectAddr, mappedObjects := range sm.procState.manifest.storageChanges {
+	for stateObjectAddr, mappedObjects := range state.manifest.storageChanges {
 		for addr, value := range mappedObjects {
 			sm.Ethereum.Reactor().Post("storage:"+stateObjectAddr+":"+addr, &StorageState{[]byte(stateObjectAddr), []byte(addr), value})
 		}
diff --git a/ethchain/state_object.go b/ethchain/state_object.go
index 7a11a1152..cb6211ea6 100644
--- a/ethchain/state_object.go
+++ b/ethchain/state_object.go
@@ -10,8 +10,9 @@ type StateObject struct {
 	// Address of the object
 	address []byte
 	// Shared attributes
-	Amount *big.Int
-	Nonce  uint64
+	Amount     *big.Int
+	ScriptHash []byte
+	Nonce      uint64
 	// Contract related attributes
 	state      *State
 	script     []byte
@@ -22,12 +23,10 @@ type StateObject struct {
 func MakeContract(tx *Transaction, state *State) *StateObject {
 	// Create contract if there's no recipient
 	if tx.IsContract() {
-		// FIXME
-		addr := tx.Hash()[12:]
+		addr := tx.CreationAddress()
 
 		value := tx.Value
-		contract := NewContract(addr, value, []byte(""))
-		state.UpdateStateObject(contract)
+		contract := NewContract(addr, value, ZeroHash256)
 
 		contract.script = tx.Data
 		contract.initScript = tx.Init
@@ -146,9 +145,10 @@ func (c *StateObject) RlpEncode() []byte {
 	if c.state != nil {
 		root = c.state.trie.Root
 	} else {
-		root = nil
+		root = ZeroHash256
 	}
-	return ethutil.Encode([]interface{}{c.Amount, c.Nonce, root, c.script})
+
+	return ethutil.Encode([]interface{}{c.Amount, c.Nonce, root, ethutil.Sha3Bin(c.script)})
 }
 
 func (c *StateObject) RlpDecode(data []byte) {
@@ -157,7 +157,10 @@ func (c *StateObject) RlpDecode(data []byte) {
 	c.Amount = decoder.Get(0).BigInt()
 	c.Nonce = decoder.Get(1).Uint()
 	c.state = NewState(ethutil.NewTrie(ethutil.Config.Db, decoder.Get(2).Interface()))
-	c.script = decoder.Get(3).Bytes()
+
+	c.ScriptHash = decoder.Get(3).Bytes()
+
+	c.script, _ = ethutil.Config.Db.Get(c.ScriptHash)
 }
 
 // Storage change object. Used by the manifest for notifying changes to
diff --git a/ethchain/state_object_test.go b/ethchain/state_object_test.go
new file mode 100644
index 000000000..1db01a537
--- /dev/null
+++ b/ethchain/state_object_test.go
@@ -0,0 +1,25 @@
+package ethchain
+
+import (
+	"fmt"
+	"github.com/ethereum/eth-go/ethdb"
+	"github.com/ethereum/eth-go/ethutil"
+	"testing"
+)
+
+func TestSync(t *testing.T) {
+	ethutil.ReadConfig("", ethutil.LogStd)
+
+	db, _ := ethdb.NewMemDatabase()
+	state := NewState(ethutil.NewTrie(db, ""))
+
+	contract := NewContract([]byte("aa"), ethutil.Big1, ZeroHash256)
+
+	contract.script = []byte{42}
+
+	state.UpdateStateObject(contract)
+	state.Sync()
+
+	object := state.GetStateObject([]byte("aa"))
+	fmt.Printf("%x\n", object.Script())
+}
diff --git a/ethchain/transaction.go b/ethchain/transaction.go
index e93e610be..bd7a0e424 100644
--- a/ethchain/transaction.go
+++ b/ethchain/transaction.go
@@ -60,7 +60,7 @@ func (tx *Transaction) IsContract() bool {
 }
 
 func (tx *Transaction) CreationAddress() []byte {
-	return tx.Hash()[12:]
+	return ethutil.Sha3Bin(ethutil.NewValue([]interface{}{tx.Sender(), tx.Nonce}).Encode())[12:]
 }
 
 func (tx *Transaction) Signature(key []byte) []byte {
@@ -109,10 +109,8 @@ func (tx *Transaction) Sign(privk []byte) error {
 	return nil
 }
 
-// [ NONCE, VALUE, GASPRICE, GAS, TO, DATA, V, R, S ]
-// [ NONCE, VALUE, GASPRICE, GAS, 0, CODE, INIT, V, R, S ]
 func (tx *Transaction) RlpData() interface{} {
-	data := []interface{}{tx.Nonce, tx.Value, tx.GasPrice, tx.Gas, tx.Recipient, tx.Data}
+	data := []interface{}{tx.Nonce, tx.GasPrice, tx.Gas, tx.Recipient, tx.Value, tx.Data}
 
 	if tx.contractCreation {
 		data = append(data, tx.Init)
@@ -135,10 +133,10 @@ func (tx *Transaction) RlpDecode(data []byte) {
 
 func (tx *Transaction) RlpValueDecode(decoder *ethutil.Value) {
 	tx.Nonce = decoder.Get(0).Uint()
-	tx.Value = decoder.Get(1).BigInt()
-	tx.GasPrice = decoder.Get(2).BigInt()
-	tx.Gas = decoder.Get(3).BigInt()
-	tx.Recipient = decoder.Get(4).Bytes()
+	tx.GasPrice = decoder.Get(1).BigInt()
+	tx.Gas = decoder.Get(2).BigInt()
+	tx.Recipient = decoder.Get(3).Bytes()
+	tx.Value = decoder.Get(4).BigInt()
 	tx.Data = decoder.Get(5).Bytes()
 
 	// If the list is of length 10 it's a contract creation tx
diff --git a/ethchain/transaction_pool.go b/ethchain/transaction_pool.go
index 6c0282dc6..796ec7c9a 100644
--- a/ethchain/transaction_pool.go
+++ b/ethchain/transaction_pool.go
@@ -131,9 +131,10 @@ func (pool *TxPool) ProcessTransaction(tx *Transaction, block *Block, toContract
 
 	block.state.UpdateStateObject(sender)
 
-	log.Printf("[TXPL] Processed Tx %x\n", tx.Hash())
+	ethutil.Config.Log.Infof("[TXPL] Processed Tx %x\n", tx.Hash())
 
-	pool.notifySubscribers(TxPost, tx)
+	// Notify all subscribers
+	pool.Ethereum.Reactor().Post("newTx:post", tx)
 
 	return
 }
@@ -148,7 +149,8 @@ func (pool *TxPool) ValidateTransaction(tx *Transaction) error {
 	}
 
 	// Get the sender
-	sender := pool.Ethereum.StateManager().procState.GetAccount(tx.Sender())
+	//sender := pool.Ethereum.StateManager().procState.GetAccount(tx.Sender())
+	sender := pool.Ethereum.StateManager().CurrentState().GetAccount(tx.Sender())
 
 	totAmount := new(big.Int).Add(tx.Value, new(big.Int).Mul(TxFee, TxFeeRat))
 	// Make sure there's enough in the sender's account. Having insufficient
@@ -188,10 +190,7 @@ out:
 				pool.addTransaction(tx)
 
 				// Notify the subscribers
-				pool.Ethereum.Reactor().Post("newTx", tx)
-
-				// Notify the subscribers
-				pool.notifySubscribers(TxPre, tx)
+				pool.Ethereum.Reactor().Post("newTx:pre", tx)
 			}
 		case <-pool.quit:
 			break out
@@ -252,14 +251,3 @@ func (pool *TxPool) Stop() {
 
 	log.Println("[TXP] Stopped")
 }
-
-func (pool *TxPool) Subscribe(channel chan TxMsg) {
-	pool.subscribers = append(pool.subscribers, channel)
-}
-
-func (pool *TxPool) notifySubscribers(ty TxMsgTy, tx *Transaction) {
-	msg := TxMsg{Type: ty, Tx: tx}
-	for _, subscriber := range pool.subscribers {
-		subscriber <- msg
-	}
-}
diff --git a/ethchain/vm.go b/ethchain/vm.go
index 584c66611..e732d22a4 100644
--- a/ethchain/vm.go
+++ b/ethchain/vm.go
@@ -95,7 +95,6 @@ func (vm *Vm) RunClosure(closure *Closure, hook DebugHook) (ret []byte, err erro
 	if ethutil.Config.Debug {
 		ethutil.Config.Log.Debugf("#   op\n")
 	}
-	fmt.Println(closure.Script)
 
 	for {
 		// The base for all big integer arithmetic
@@ -472,7 +471,7 @@ func (vm *Vm) RunClosure(closure *Closure, hook DebugHook) (ret []byte, err erro
 			args := mem.Get(inOffset.Int64(), inSize.Int64())
 
 			// Fetch the contract which will serve as the closure body
-			contract := vm.state.GetContract(addr.Bytes())
+			contract := vm.state.GetStateObject(addr.Bytes())
 
 			if contract != nil {
 				// Prepay for the gas
diff --git a/ethchain/vm_test.go b/ethchain/vm_test.go
index b919b496f..5d03ccf0c 100644
--- a/ethchain/vm_test.go
+++ b/ethchain/vm_test.go
@@ -12,7 +12,7 @@ import (
 )
 
 func TestRun4(t *testing.T) {
-	ethutil.ReadConfig("")
+	ethutil.ReadConfig("", ethutil.LogStd)
 
 	db, _ := ethdb.NewMemDatabase()
 	state := NewState(ethutil.NewTrie(db, ""))
diff --git a/ethereum.go b/ethereum.go
index 83a74f302..3a7202d53 100644
--- a/ethereum.go
+++ b/ethereum.go
@@ -222,7 +222,7 @@ func (s *Ethereum) ConnectToPeer(addr string) error {
 
 			if phost == chost {
 				alreadyConnected = true
-				ethutil.Config.Log.Debugf("[SERV] Peer %s already added.\n", chost)
+				//ethutil.Config.Log.Debugf("[SERV] Peer %s already added.\n", chost)
 				return
 			}
 		})
@@ -235,7 +235,7 @@ func (s *Ethereum) ConnectToPeer(addr string) error {
 
 		s.peers.PushBack(peer)
 
-		log.Printf("[SERV] Adding peer %d / %d\n", s.peers.Len(), s.MaxPeers)
+		ethutil.Config.Log.Infof("[SERV] Adding peer (%s) %d / %d\n", addr, s.peers.Len(), s.MaxPeers)
 	}
 
 	return nil
diff --git a/ethminer/miner.go b/ethminer/miner.go
index 3796c873e..294bc7b3d 100644
--- a/ethminer/miner.go
+++ b/ethminer/miner.go
@@ -5,7 +5,6 @@ import (
 	"github.com/ethereum/eth-go/ethchain"
 	"github.com/ethereum/eth-go/ethutil"
 	"github.com/ethereum/eth-go/ethwire"
-	"log"
 )
 
 type Miner struct {
@@ -26,7 +25,7 @@ func NewDefaultMiner(coinbase []byte, ethereum ethchain.EthManager) Miner {
 	quitChan := make(chan ethutil.React, 1)  // This is the channel that can exit the miner thread
 
 	ethereum.Reactor().Subscribe("newBlock", reactChan)
-	ethereum.Reactor().Subscribe("newTx", reactChan)
+	ethereum.Reactor().Subscribe("newTx:pre", reactChan)
 
 	// We need the quit chan to be a Reactor event.
 	// The POW search method is actually blocking and if we don't
@@ -34,7 +33,7 @@ func NewDefaultMiner(coinbase []byte, ethereum ethchain.EthManager) Miner {
 	// The miner overseer will never get the reactor events themselves
 	// Only after the miner will find the sha
 	ethereum.Reactor().Subscribe("newBlock", quitChan)
-	ethereum.Reactor().Subscribe("newTx", quitChan)
+	ethereum.Reactor().Subscribe("newTx:pre", quitChan)
 
 	miner := Miner{
 		pow:       &ethchain.EasyPow{},
@@ -53,18 +52,18 @@ func NewDefaultMiner(coinbase []byte, ethereum ethchain.EthManager) Miner {
 }
 func (miner *Miner) Start() {
 	// Prepare inital block
-	miner.ethereum.StateManager().Prepare(miner.block.State(), miner.block.State())
-	go func() { miner.listener() }()
+	//miner.ethereum.StateManager().Prepare(miner.block.State(), miner.block.State())
+	go miner.listener()
 }
 func (miner *Miner) listener() {
 	for {
 		select {
 		case chanMessage := <-miner.reactChan:
 			if block, ok := chanMessage.Resource.(*ethchain.Block); ok {
-				log.Println("[MINER] Got new block via Reactor")
+				ethutil.Config.Log.Infoln("[MINER] Got new block via Reactor")
 				if bytes.Compare(miner.ethereum.BlockChain().CurrentBlock.Hash(), block.Hash()) == 0 {
 					// TODO: Perhaps continue mining to get some uncle rewards
-					log.Println("[MINER] New top block found resetting state")
+					ethutil.Config.Log.Infoln("[MINER] New top block found resetting state")
 
 					// Filter out which Transactions we have that were not in this block
 					var newtxs []*ethchain.Transaction
@@ -86,15 +85,15 @@ func (miner *Miner) listener() {
 
 				} else {
 					if bytes.Compare(block.PrevHash, miner.ethereum.BlockChain().CurrentBlock.PrevHash) == 0 {
-						log.Println("[MINER] Adding uncle block")
+						ethutil.Config.Log.Infoln("[MINER] Adding uncle block")
 						miner.uncles = append(miner.uncles, block)
-						miner.ethereum.StateManager().Prepare(miner.block.State(), miner.block.State())
+						//miner.ethereum.StateManager().Prepare(miner.block.State(), miner.block.State())
 					}
 				}
 			}
 
 			if tx, ok := chanMessage.Resource.(*ethchain.Transaction); ok {
-				//log.Println("[MINER] Got new transaction from Reactor", tx)
+				//log.Infoln("[MINER] Got new transaction from Reactor", tx)
 				found := false
 				for _, ctx := range miner.txs {
 					if found = bytes.Compare(ctx.Hash(), tx.Hash()) == 0; found {
@@ -103,49 +102,37 @@ func (miner *Miner) listener() {
 
 				}
 				if found == false {
-					//log.Println("[MINER] We did not know about this transaction, adding")
+					//log.Infoln("[MINER] We did not know about this transaction, adding")
 					miner.txs = append(miner.txs, tx)
 					miner.block = miner.ethereum.BlockChain().NewBlock(miner.coinbase, miner.txs)
 					miner.block.SetTransactions(miner.txs)
 				} else {
-					//log.Println("[MINER] We already had this transaction, ignoring")
+					//log.Infoln("[MINER] We already had this transaction, ignoring")
 				}
 			}
 		default:
-			log.Println("[MINER] Mining on block. Includes", len(miner.txs), "transactions")
+			ethutil.Config.Log.Infoln("[MINER] Mining on block. Includes", len(miner.txs), "transactions")
 
 			// Apply uncles
 			if len(miner.uncles) > 0 {
 				miner.block.SetUncles(miner.uncles)
 			}
 
-			// FIXME @ maranh, first block doesn't need this. Everything after the first block does.
-			// Please check and fix
-			miner.ethereum.StateManager().Prepare(miner.block.State(), miner.block.State())
 			// Apply all transactions to the block
-			miner.ethereum.StateManager().ApplyTransactions(miner.block, miner.block.Transactions())
-			miner.ethereum.StateManager().AccumelateRewards(miner.block)
+			miner.ethereum.StateManager().ApplyTransactions(miner.block.State(), miner.block, miner.block.Transactions())
+			miner.ethereum.StateManager().AccumelateRewards(miner.block.State(), miner.block)
 
 			// Search the nonce
-			//log.Println("[MINER] Initialision complete, starting mining")
 			miner.block.Nonce = miner.pow.Search(miner.block, miner.quitChan)
 			if miner.block.Nonce != nil {
-				miner.ethereum.StateManager().PrepareDefault(miner.block)
-				err := miner.ethereum.StateManager().ProcessBlock(miner.block, true)
+				err := miner.ethereum.StateManager().ProcessBlock(miner.ethereum.StateManager().CurrentState(), miner.block, true)
 				if err != nil {
-					log.Println(err)
+					ethutil.Config.Log.Infoln(err)
 					miner.txs = []*ethchain.Transaction{} // Move this somewhere neat
 					miner.block = miner.ethereum.BlockChain().NewBlock(miner.coinbase, miner.txs)
 				} else {
-
-					/*
-						// XXX @maranh This is already done in the state manager, why a 2nd time?
-						if !miner.ethereum.StateManager().Pow.Verify(miner.block.HashNoNonce(), miner.block.Difficulty, miner.block.Nonce) {
-							log.Printf("Second stage verification error: Block's nonce is invalid (= %v)\n", ethutil.Hex(miner.block.Nonce))
-						}
-					*/
 					miner.ethereum.Broadcast(ethwire.MsgBlockTy, []interface{}{miner.block.Value().Val})
-					log.Printf("[MINER] 🔨  Mined block %x\n", miner.block.Hash())
+					ethutil.Config.Log.Infof("[MINER] 🔨  Mined block %x\n", miner.block.Hash())
 
 					miner.txs = []*ethchain.Transaction{} // Move this somewhere neat
 					miner.block = miner.ethereum.BlockChain().NewBlock(miner.coinbase, miner.txs)
diff --git a/ethpub/pub.go b/ethpub/pub.go
index daacb9d78..fb1018d47 100644
--- a/ethpub/pub.go
+++ b/ethpub/pub.go
@@ -45,7 +45,7 @@ func (lib *PEthereum) GetKey() *PKey {
 }
 
 func (lib *PEthereum) GetStateObject(address string) *PStateObject {
-	stateObject := lib.stateManager.ProcState().GetContract(ethutil.FromHex(address))
+	stateObject := lib.stateManager.CurrentState().GetStateObject(ethutil.FromHex(address))
 	if stateObject != nil {
 		return NewPStateObject(stateObject)
 	}
@@ -160,8 +160,8 @@ func (lib *PEthereum) createTx(key, recipient, valueStr, gasStr, gasPriceStr, in
 	}
 
 	acc := lib.stateManager.TransState().GetStateObject(keyPair.Address())
-	//acc := lib.stateManager.GetAddrState(keyPair.Address())
 	tx.Nonce = acc.Nonce
+	acc.Nonce += 1
 	lib.stateManager.TransState().SetStateObject(acc)
 
 	tx.Sign(keyPair.PrivateKey)
diff --git a/ethpub/types.go b/ethpub/types.go
index c902afc56..5d3bfcaaa 100644
--- a/ethpub/types.go
+++ b/ethpub/types.go
@@ -112,6 +112,14 @@ func (c *PStateObject) IsContract() bool {
 	return false
 }
 
+func (c *PStateObject) Script() string {
+	if c.object != nil {
+		return ethutil.Hex(c.object.Script())
+	}
+
+	return ""
+}
+
 type PStorageState struct {
 	StateAddress string
 	Address      string
diff --git a/ethutil/common.go b/ethutil/common.go
index 983ea5d1b..771dfc723 100644
--- a/ethutil/common.go
+++ b/ethutil/common.go
@@ -7,13 +7,13 @@ import (
 
 // The different number of units
 var (
-	Ether  = BigPow(10, 18)
-	Finney = BigPow(10, 15)
-	Szabo  = BigPow(10, 12)
-	Vita   = BigPow(10, 9)
-	Turing = BigPow(10, 6)
-	Eins   = BigPow(10, 3)
-	Wei    = big.NewInt(1)
+	Ether   = BigPow(10, 18)
+	Finney  = BigPow(10, 15)
+	Szabo   = BigPow(10, 12)
+	Shannon = BigPow(10, 9)
+	Babbage = BigPow(10, 6)
+	Ada     = BigPow(10, 3)
+	Wei     = big.NewInt(1)
 )
 
 // Currency to string
@@ -27,12 +27,12 @@ func CurrencyToString(num *big.Int) string {
 		return fmt.Sprintf("%v Finney", new(big.Int).Div(num, Finney))
 	case num.Cmp(Szabo) >= 0:
 		return fmt.Sprintf("%v Szabo", new(big.Int).Div(num, Szabo))
-	case num.Cmp(Vita) >= 0:
-		return fmt.Sprintf("%v Vita", new(big.Int).Div(num, Vita))
-	case num.Cmp(Turing) >= 0:
-		return fmt.Sprintf("%v Turing", new(big.Int).Div(num, Turing))
-	case num.Cmp(Eins) >= 0:
-		return fmt.Sprintf("%v Eins", new(big.Int).Div(num, Eins))
+	case num.Cmp(Shannon) >= 0:
+		return fmt.Sprintf("%v Shannon", new(big.Int).Div(num, Shannon))
+	case num.Cmp(Babbage) >= 0:
+		return fmt.Sprintf("%v Babbage", new(big.Int).Div(num, Babbage))
+	case num.Cmp(Ada) >= 0:
+		return fmt.Sprintf("%v Ada", new(big.Int).Div(num, Ada))
 	}
 
 	return fmt.Sprintf("%v Wei", num)
diff --git a/ethutil/common_test.go b/ethutil/common_test.go
index 8031f08ab..2667eaf3a 100644
--- a/ethutil/common_test.go
+++ b/ethutil/common_test.go
@@ -26,15 +26,15 @@ func TestCommon(t *testing.T) {
 		t.Error("Got", szabo)
 	}
 
-	if vito != "10 Vita" {
+	if vito != "10 Shannon" {
 		t.Error("Got", vito)
 	}
 
-	if turing != "10 Turing" {
+	if turing != "10 Babbage" {
 		t.Error("Got", turing)
 	}
 
-	if eins != "10 Eins" {
+	if eins != "10 Ada" {
 		t.Error("Got", eins)
 	}
 
diff --git a/ethutil/config.go b/ethutil/config.go
index b4bd9158e..abe86babe 100644
--- a/ethutil/config.go
+++ b/ethutil/config.go
@@ -9,14 +9,6 @@ import (
 	"runtime"
 )
 
-// Log types available
-type LogType byte
-
-const (
-	LogTypeStdIn = 1
-	LogTypeFile  = 2
-)
-
 // Config struct
 type config struct {
 	Db Database
@@ -34,7 +26,7 @@ var Config *config
 // Read config
 //
 // Initialize the global Config variable with default settings
-func ReadConfig(base string) *config {
+func ReadConfig(base string, logTypes LoggerType) *config {
 	if Config == nil {
 		usr, _ := user.Current()
 		path := path.Join(usr.HomeDir, base)
@@ -50,8 +42,8 @@ func ReadConfig(base string) *config {
 			}
 		}
 
-		Config = &config{ExecPath: path, Debug: true, Ver: "0.5.0 RC6"}
-		Config.Log = NewLogger(LogFile|LogStd, LogLevelDebug)
+		Config = &config{ExecPath: path, Debug: true, Ver: "0.5.0 RC7"}
+		Config.Log = NewLogger(logTypes, LogLevelDebug)
 		Config.SetClientString("/Ethereum(G)")
 	}
 
@@ -138,7 +130,6 @@ func (log *Logger) Infoln(v ...interface{}) {
 		return
 	}
 
-	//fmt.Println(len(log.logSys))
 	for _, logger := range log.logSys {
 		logger.Println(v...)
 	}
@@ -153,3 +144,15 @@ func (log *Logger) Infof(format string, v ...interface{}) {
 		logger.Printf(format, v...)
 	}
 }
+
+func (log *Logger) Fatal(v ...interface{}) {
+	if log.logLevel > LogLevelInfo {
+		return
+	}
+
+	for _, logger := range log.logSys {
+		logger.Println(v...)
+	}
+
+	os.Exit(1)
+}
diff --git a/ethutil/reactor.go b/ethutil/reactor.go
index f8084986c..7cf145245 100644
--- a/ethutil/reactor.go
+++ b/ethutil/reactor.go
@@ -46,6 +46,7 @@ func (e *ReactorEvent) Remove(ch chan React) {
 // Basic reactor resource
 type React struct {
 	Resource interface{}
+	Event    string
 }
 
 // The reactor basic engine. Acts as bridge
@@ -81,6 +82,6 @@ func (reactor *ReactorEngine) Unsubscribe(event string, ch chan React) {
 func (reactor *ReactorEngine) Post(event string, resource interface{}) {
 	ev := reactor.patterns[event]
 	if ev != nil {
-		ev.Post(React{Resource: resource})
+		ev.Post(React{Resource: resource, Event: event})
 	}
 }
diff --git a/peer.go b/peer.go
index 4093a4902..993f48d20 100644
--- a/peer.go
+++ b/peer.go
@@ -18,7 +18,7 @@ const (
 	// The size of the output buffer for writing messages
 	outputBufferSize = 50
 	// Current protocol version
-	ProtocolVersion = 8
+	ProtocolVersion = 10
 )
 
 type DiscReason byte
@@ -127,6 +127,7 @@ type Peer struct {
 
 	// Indicated whether the node is catching up or not
 	catchingUp      bool
+	diverted        bool
 	blocksRequested int
 
 	Version string
@@ -190,7 +191,6 @@ func (p *Peer) QueueMessage(msg *ethwire.Msg) {
 	if atomic.LoadInt32(&p.connected) != 1 {
 		return
 	}
-
 	p.outputQueue <- msg
 }
 
@@ -268,7 +268,6 @@ func (p *Peer) HandleInbound() {
 	for atomic.LoadInt32(&p.disconnect) == 0 {
 		// HMM?
 		time.Sleep(500 * time.Millisecond)
-
 		// Wait for a message from the peer
 		msgs, err := ethwire.ReadMessages(p.conn)
 		if err != nil {
@@ -300,39 +299,44 @@ func (p *Peer) HandleInbound() {
 				var err error
 
 				// Make sure we are actually receiving anything
-				if msg.Data.Len()-1 > 1 && p.catchingUp {
+				if msg.Data.Len()-1 > 1 && p.diverted {
 					// We requested blocks and now we need to make sure we have a common ancestor somewhere in these blocks so we can find
 					// common ground to start syncing from
 					lastBlock = ethchain.NewBlockFromRlpValue(msg.Data.Get(msg.Data.Len() - 1))
-					if !p.ethereum.StateManager().BlockChain().HasBlock(lastBlock.Hash()) {
-						// If we can't find a common ancenstor we need to request more blocks.
-						// FIXME: At one point this won't scale anymore since we are not asking for an offset
-						// we just keep increasing the amount of blocks.
-						//fmt.Println("[PEER] No common ancestor found, requesting more blocks.")
-						p.blocksRequested = p.blocksRequested * 2
-						p.catchingUp = false
-						p.SyncWithBlocks()
-					}
-
+					ethutil.Config.Log.Infof("[PEER] Last block: %x. Checking if we have it locally.\n", lastBlock.Hash())
 					for i := msg.Data.Len() - 1; i >= 0; i-- {
 						block = ethchain.NewBlockFromRlpValue(msg.Data.Get(i))
 						// Do we have this block on our chain? If so we can continue
 						if !p.ethereum.StateManager().BlockChain().HasBlock(block.Hash()) {
 							// We don't have this block, but we do have a block with the same prevHash, diversion time!
 							if p.ethereum.StateManager().BlockChain().HasBlockWithPrevHash(block.PrevHash) {
-								if p.ethereum.StateManager().BlockChain().FindCanonicalChainFromMsg(msg, block.PrevHash) {
-									return
+								p.diverted = false
+								if !p.ethereum.StateManager().BlockChain().FindCanonicalChainFromMsg(msg, block.PrevHash) {
+									p.SyncWithPeerToLastKnown()
 								}
+								break
 							}
 						}
 					}
+					if !p.ethereum.StateManager().BlockChain().HasBlock(lastBlock.Hash()) {
+						// If we can't find a common ancenstor we need to request more blocks.
+						// FIXME: At one point this won't scale anymore since we are not asking for an offset
+						// we just keep increasing the amount of blocks.
+						p.blocksRequested = p.blocksRequested * 2
+
+						ethutil.Config.Log.Infof("[PEER] No common ancestor found, requesting %d more blocks.\n", p.blocksRequested)
+						p.catchingUp = false
+						p.FindCommonParentBlock()
+						break
+					}
 				}
 
 				for i := msg.Data.Len() - 1; i >= 0; i-- {
 					block = ethchain.NewBlockFromRlpValue(msg.Data.Get(i))
 
-					p.ethereum.StateManager().PrepareDefault(block)
-					err = p.ethereum.StateManager().ProcessBlock(block, false)
+					//p.ethereum.StateManager().PrepareDefault(block)
+					state := p.ethereum.StateManager().CurrentState()
+					err = p.ethereum.StateManager().ProcessBlock(state, block, false)
 
 					if err != nil {
 						if ethutil.Config.Debug {
@@ -345,23 +349,28 @@ func (p *Peer) HandleInbound() {
 					}
 				}
 
+				if msg.Data.Len() == 0 {
+					// Set catching up to false if
+					// the peer has nothing left to give
+					p.catchingUp = false
+				}
+
 				if err != nil {
 					// If the parent is unknown try to catch up with this peer
 					if ethchain.IsParentErr(err) {
-						ethutil.Config.Log.Infoln("Attempting to catch up")
+						ethutil.Config.Log.Infoln("Attempting to catch up since we don't know the parent")
 						p.catchingUp = false
 						p.CatchupWithPeer(p.ethereum.BlockChain().CurrentBlock.Hash())
 					} else if ethchain.IsValidationErr(err) {
-						fmt.Println(err)
+						fmt.Println("Err:", err)
 						p.catchingUp = false
 					}
 				} else {
-					// XXX Do we want to catch up if there were errors?
 					// If we're catching up, try to catch up further.
 					if p.catchingUp && msg.Data.Len() > 1 {
-						if ethutil.Config.Debug && lastBlock != nil {
+						if lastBlock != nil {
 							blockInfo := lastBlock.BlockInfo()
-							ethutil.Config.Log.Infof("Synced to block height #%d %x %x\n", blockInfo.Number, lastBlock.Hash(), blockInfo.Hash)
+							ethutil.Config.Log.Debugf("Synced to block height #%d %x %x\n", blockInfo.Number, lastBlock.Hash(), blockInfo.Hash)
 						}
 
 						p.catchingUp = false
@@ -371,11 +380,6 @@ func (p *Peer) HandleInbound() {
 					}
 				}
 
-				if msg.Data.Len() == 0 {
-					// Set catching up to false if
-					// the peer has nothing left to give
-					p.catchingUp = false
-				}
 			case ethwire.MsgTxTy:
 				// If the message was a transaction queue the transaction
 				// in the TxPool where it will undergo validation and
@@ -443,7 +447,7 @@ func (p *Peer) HandleInbound() {
 					}
 
 				} else {
-					ethutil.Config.Log.Debugf("[PEER] Could not find a similar block")
+					//ethutil.Config.Log.Debugf("[PEER] Could not find a similar block")
 					// If no blocks are found we send back a reply with msg not in chain
 					// and the last hash from get chain
 					lastHash := msg.Data.Get(l - 1)
@@ -451,8 +455,14 @@ func (p *Peer) HandleInbound() {
 					p.QueueMessage(ethwire.NewMessage(ethwire.MsgNotInChainTy, []interface{}{lastHash.Raw()}))
 				}
 			case ethwire.MsgNotInChainTy:
-				ethutil.Config.Log.Debugf("Not in chain %x\n", msg.Data)
-				// TODO
+				ethutil.Config.Log.Debugf("Not in chain: %x\n", msg.Data.Get(0).Bytes())
+				if p.diverted == true {
+					// If were already looking for a common parent and we get here again we need to go deeper
+					p.blocksRequested = p.blocksRequested * 2
+				}
+				p.diverted = true
+				p.catchingUp = false
+				p.FindCommonParentBlock()
 			case ethwire.MsgGetTxsTy:
 				// Get the current transactions of the pool
 				txs := p.ethereum.TxPool().CurrentTransactions()
@@ -470,7 +480,6 @@ func (p *Peer) HandleInbound() {
 			}
 		}
 	}
-
 	p.Stop()
 }
 
@@ -580,14 +589,18 @@ func (p *Peer) handleHandshake(msg *ethwire.Msg) {
 
 	}
 
-	// Catch up with the connected peer
-	p.SyncWithBlocks()
-
 	// Set the peer's caps
 	p.caps = Caps(c.Get(3).Byte())
 	// Get a reference to the peers version
 	p.Version = c.Get(2).Str()
 
+	// Catch up with the connected peer
+	if !p.ethereum.IsUpToDate() {
+		ethutil.Config.Log.Debugln("Already syncing up with a peer; sleeping")
+		time.Sleep(10 * time.Second)
+	}
+	p.SyncWithPeerToLastKnown()
+
 	ethutil.Config.Log.Debugln("[PEER]", p)
 }
 
@@ -608,38 +621,47 @@ func (p *Peer) String() string {
 	return fmt.Sprintf("[%s] (%s) %v %s [%s]", strConnectType, strBoundType, p.conn.RemoteAddr(), p.Version, p.caps)
 
 }
-func (p *Peer) SyncWithBlocks() {
-	if !p.catchingUp {
-		p.catchingUp = true
-		// FIXME: THIS SHOULD NOT BE NEEDED
-		if p.blocksRequested == 0 {
-			p.blocksRequested = 10
-		}
-		blocks := p.ethereum.BlockChain().GetChain(p.ethereum.BlockChain().CurrentBlock.Hash(), p.blocksRequested)
-
-		var hashes []interface{}
-		for _, block := range blocks {
-			hashes = append(hashes, block.Hash())
-		}
-
-		msgInfo := append(hashes, uint64(50))
-
-		msg := ethwire.NewMessage(ethwire.MsgGetChainTy, msgInfo)
-		p.QueueMessage(msg)
-	}
+func (p *Peer) SyncWithPeerToLastKnown() {
+	p.catchingUp = false
+	p.CatchupWithPeer(p.ethereum.BlockChain().CurrentBlock.Hash())
 }
 
+func (p *Peer) FindCommonParentBlock() {
+	if p.catchingUp {
+		return
+	}
+
+	p.catchingUp = true
+	if p.blocksRequested == 0 {
+		p.blocksRequested = 20
+	}
+	blocks := p.ethereum.BlockChain().GetChain(p.ethereum.BlockChain().CurrentBlock.Hash(), p.blocksRequested)
+
+	var hashes []interface{}
+	for _, block := range blocks {
+		hashes = append(hashes, block.Hash())
+	}
+
+	msgInfo := append(hashes, uint64(len(hashes)))
+
+	ethutil.Config.Log.Infof("Asking for block from %x (%d total) from %s\n", p.ethereum.BlockChain().CurrentBlock.Hash(), len(hashes), p.conn.RemoteAddr().String())
+
+	msg := ethwire.NewMessage(ethwire.MsgGetChainTy, msgInfo)
+	p.QueueMessage(msg)
+}
 func (p *Peer) CatchupWithPeer(blockHash []byte) {
 	if !p.catchingUp {
+		// Make sure nobody else is catching up when you want to do this
 		p.catchingUp = true
 		msg := ethwire.NewMessage(ethwire.MsgGetChainTy, []interface{}{blockHash, uint64(50)})
 		p.QueueMessage(msg)
 
-		ethutil.Config.Log.Debugf("Requesting blockchain %x...\n", p.ethereum.BlockChain().CurrentBlock.Hash()[:4])
+		ethutil.Config.Log.Debugf("Requesting blockchain %x... from peer %s\n", p.ethereum.BlockChain().CurrentBlock.Hash()[:4], p.conn.RemoteAddr())
 
-		msg = ethwire.NewMessage(ethwire.MsgGetTxsTy, []interface{}{})
-		p.QueueMessage(msg)
-		ethutil.Config.Log.Debugln("Requested transactions")
+		/*
+			msg = ethwire.NewMessage(ethwire.MsgGetTxsTy, []interface{}{})
+			p.QueueMessage(msg)
+		*/
 	}
 }