diff --git a/blockchain/reactor_test.go b/blockchain/reactor_test.go
index ecb4a9e63..f58b83942 100644
--- a/blockchain/reactor_test.go
+++ b/blockchain/reactor_test.go
@@ -21,7 +21,7 @@ func makeStateAndBlockStore(logger log.Logger) (sm.State, *BlockStore) {
 	// Get State
 	stateDB := dbm.NewMemDB()
 	state, _ := sm.GetState(stateDB, config.GenesisFile())
-	sm.SaveState(stateDB, state, state.AppHash)
+	sm.SaveState(stateDB, state)
 
 	return state, blockStore
 }
diff --git a/consensus/common_test.go b/consensus/common_test.go
index 6598c15eb..ba3564aae 100644
--- a/consensus/common_test.go
+++ b/consensus/common_test.go
@@ -235,16 +235,16 @@ func subscribeToVoter(cs *ConsensusState, addr []byte) chan interface{} {
 //-------------------------------------------------------------------------------
 // consensus states
 
-func newConsensusState(state *sm.State, pv types.PrivValidator, app abci.Application) *ConsensusState {
+func newConsensusState(state sm.State, pv types.PrivValidator, app abci.Application) *ConsensusState {
 	return newConsensusStateWithConfig(config, state, pv, app)
 }
 
-func newConsensusStateWithConfig(thisConfig *cfg.Config, state *sm.State, pv types.PrivValidator, app abci.Application) *ConsensusState {
+func newConsensusStateWithConfig(thisConfig *cfg.Config, state sm.State, pv types.PrivValidator, app abci.Application) *ConsensusState {
 	blockDB := dbm.NewMemDB()
 	return newConsensusStateWithConfigAndBlockStore(thisConfig, state, pv, app, blockDB)
 }
 
-func newConsensusStateWithConfigAndBlockStore(thisConfig *cfg.Config, state *sm.State, pv types.PrivValidator, app abci.Application, blockDB dbm.DB) *ConsensusState {
+func newConsensusStateWithConfigAndBlockStore(thisConfig *cfg.Config, state sm.State, pv types.PrivValidator, app abci.Application, blockDB dbm.DB) *ConsensusState {
 	// Get BlockStore
 	blockStore := bc.NewBlockStore(blockDB)
 
@@ -264,7 +264,10 @@ func newConsensusStateWithConfigAndBlockStore(thisConfig *cfg.Config, state *sm.
 	evpool := types.MockEvidencePool{}
 
 	// Make ConsensusReactor
-	cs := NewConsensusState(thisConfig.Consensus, state, proxyAppConnCon, blockStore, mempool, evpool)
+	stateDB := dbm.NewMemDB() // XXX !!
+	blockExec := sm.NewBlockExecutor(stateDB, log.TestingLogger(),
+		nil, proxyAppConnCon, mempool, evpool)
+	cs := NewConsensusState(thisConfig.Consensus, state, blockExec, blockStore, mempool, evpool)
 	cs.SetLogger(log.TestingLogger())
 	cs.SetPrivValidator(pv)
 
@@ -284,9 +287,7 @@ func loadPrivValidator(config *cfg.Config) *types.PrivValidatorFS {
 }
 
 func fixedConsensusStateDummy(config *cfg.Config, logger log.Logger) *ConsensusState {
-	stateDB := dbm.NewMemDB()
-	state, _ := sm.MakeGenesisStateFromFile(stateDB, config.GenesisFile())
-	state.SetLogger(logger.With("module", "state"))
+	state, _ := sm.MakeGenesisStateFromFile(config.GenesisFile())
 	privValidator := loadPrivValidator(config)
 	cs := newConsensusState(state, privValidator, dummy.NewDummyApplication())
 	cs.SetLogger(logger)
@@ -354,10 +355,9 @@ func randConsensusNet(nValidators int, testName string, tickerFunc func() Timeou
 	css := make([]*ConsensusState, nValidators)
 	logger := consensusLogger()
 	for i := 0; i < nValidators; i++ {
-		db := dbm.NewMemDB() // each state needs its own db
-		state, _ := sm.MakeGenesisState(db, genDoc)
-		state.SetLogger(logger.With("module", "state", "validator", i))
-		state.Save()
+		stateDB := dbm.NewMemDB() // each state needs its own db
+		state, _ := sm.MakeGenesisState(genDoc)
+		sm.SaveState(stateDB, state)
 		thisConfig := ResetConfig(cmn.Fmt("%s_%d", testName, i))
 		for _, opt := range configOpts {
 			opt(thisConfig)
@@ -380,10 +380,9 @@ func randConsensusNetWithPeers(nValidators, nPeers int, testName string, tickerF
 	css := make([]*ConsensusState, nPeers)
 	logger := consensusLogger()
 	for i := 0; i < nPeers; i++ {
-		db := dbm.NewMemDB() // each state needs its own db
-		state, _ := sm.MakeGenesisState(db, genDoc)
-		state.SetLogger(logger.With("module", "state", "validator", i))
-		state.Save()
+		stateDB := dbm.NewMemDB() // each state needs its own db
+		state, _ := sm.MakeGenesisState(genDoc)
+		sm.SaveState(stateDB, state)
 		thisConfig := ResetConfig(cmn.Fmt("%s_%d", testName, i))
 		ensureDir(path.Dir(thisConfig.Consensus.WalFile()), 0700) // dir for wal
 		var privVal types.PrivValidator
@@ -437,12 +436,11 @@ func randGenesisDoc(numValidators int, randPower bool, minPower int64) (*types.G
 	}, privValidators
 }
 
-func randGenesisState(numValidators int, randPower bool, minPower int64) (*sm.State, []*types.PrivValidatorFS) {
+func randGenesisState(numValidators int, randPower bool, minPower int64) (sm.State, []*types.PrivValidatorFS) {
 	genDoc, privValidators := randGenesisDoc(numValidators, randPower, minPower)
+	s0, _ := sm.MakeGenesisState(genDoc)
 	db := dbm.NewMemDB()
-	s0, _ := sm.MakeGenesisState(db, genDoc)
-	s0.SetLogger(log.TestingLogger().With("module", "state"))
-	s0.Save()
+	sm.SaveState(db, s0)
 	return s0, privValidators
 }
 
diff --git a/consensus/reactor.go b/consensus/reactor.go
index eb752ee17..9b3393e94 100644
--- a/consensus/reactor.go
+++ b/consensus/reactor.go
@@ -82,7 +82,7 @@ func (conR *ConsensusReactor) OnStop() {
 
 // SwitchToConsensus switches from fast_sync mode to consensus mode.
 // It resets the state, turns off fast_sync, and starts the consensus state-machine
-func (conR *ConsensusReactor) SwitchToConsensus(state *sm.State, blocksSynced int) {
+func (conR *ConsensusReactor) SwitchToConsensus(state sm.State, blocksSynced int) {
 	conR.Logger.Info("SwitchToConsensus")
 	conR.conS.reconstructLastCommit(state)
 	// NOTE: The line below causes broadcastNewRoundStepRoutine() to
diff --git a/consensus/replay.go b/consensus/replay.go
index a9aaeefcf..55c291783 100644
--- a/consensus/replay.go
+++ b/consensus/replay.go
@@ -13,6 +13,7 @@ import (
 	abci "github.com/tendermint/abci/types"
 	//auto "github.com/tendermint/tmlibs/autofile"
 	cmn "github.com/tendermint/tmlibs/common"
+	dbm "github.com/tendermint/tmlibs/db"
 	"github.com/tendermint/tmlibs/log"
 
 	"github.com/tendermint/tendermint/proxy"
@@ -186,15 +187,16 @@ func makeHeightSearchFunc(height int64) auto.SearchFunc {
 // we were last and using the WAL to recover there
 
 type Handshaker struct {
-	state  *sm.State
-	store  types.BlockStore
-	logger log.Logger
+	stateDB      dbm.DB
+	initialState sm.State
+	store        types.BlockStore
+	logger       log.Logger
 
 	nBlocks int // number of blocks applied to the state
 }
 
-func NewHandshaker(state *sm.State, store types.BlockStore) *Handshaker {
-	return &Handshaker{state, store, log.NewNopLogger(), 0}
+func NewHandshaker(stateDB dbm.DB, state sm.State, store types.BlockStore) *Handshaker {
+	return &Handshaker{stateDB, state, store, log.NewNopLogger(), 0}
 }
 
 func (h *Handshaker) SetLogger(l log.Logger) {
@@ -224,7 +226,7 @@ func (h *Handshaker) Handshake(proxyApp proxy.AppConns) error {
 	// TODO: check version
 
 	// replay blocks up to the latest in the blockstore
-	_, err = h.ReplayBlocks(appHash, blockHeight, proxyApp)
+	_, err = h.ReplayBlocks(h.initialState, appHash, blockHeight, proxyApp)
 	if err != nil {
 		return fmt.Errorf("Error on replay: %v", err)
 	}
@@ -238,15 +240,15 @@ func (h *Handshaker) Handshake(proxyApp proxy.AppConns) error {
 
 // Replay all blocks since appBlockHeight and ensure the result matches the current state.
 // Returns the final AppHash or an error
-func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp proxy.AppConns) ([]byte, error) {
+func (h *Handshaker) ReplayBlocks(state sm.State, appHash []byte, appBlockHeight int64, proxyApp proxy.AppConns) ([]byte, error) {
 
 	storeBlockHeight := h.store.Height()
-	stateBlockHeight := h.state.LastBlockHeight
+	stateBlockHeight := state.LastBlockHeight
 	h.logger.Info("ABCI Replay Blocks", "appHeight", appBlockHeight, "storeHeight", storeBlockHeight, "stateHeight", stateBlockHeight)
 
 	// If appBlockHeight == 0 it means that we are at genesis and hence should send InitChain
 	if appBlockHeight == 0 {
-		validators := types.TM2PB.Validators(h.state.Validators)
+		validators := types.TM2PB.Validators(state.Validators)
 		if _, err := proxyApp.Consensus().InitChainSync(abci.RequestInitChain{validators}); err != nil {
 			return nil, err
 		}
@@ -254,7 +256,7 @@ func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp
 
 	// First handle edge cases and constraints on the storeBlockHeight
 	if storeBlockHeight == 0 {
-		return appHash, h.checkAppHash(appHash)
+		return appHash, checkAppHash(state, appHash)
 
 	} else if storeBlockHeight < appBlockHeight {
 		// the app should never be ahead of the store (but this is under app's control)
@@ -269,6 +271,7 @@ func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp
 		cmn.PanicSanity(cmn.Fmt("StoreBlockHeight (%d) > StateBlockHeight + 1 (%d)", storeBlockHeight, stateBlockHeight+1))
 	}
 
+	var err error
 	// Now either store is equal to state, or one ahead.
 	// For each, consider all cases of where the app could be, given app <= store
 	if storeBlockHeight == stateBlockHeight {
@@ -276,11 +279,11 @@ func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp
 		// Either the app is asking for replay, or we're all synced up.
 		if appBlockHeight < storeBlockHeight {
 			// the app is behind, so replay blocks, but no need to go through WAL (state is already synced to store)
-			return h.replayBlocks(proxyApp, appBlockHeight, storeBlockHeight, false)
+			return h.replayBlocks(state, proxyApp, appBlockHeight, storeBlockHeight, false)
 
 		} else if appBlockHeight == storeBlockHeight {
 			// We're good!
-			return appHash, h.checkAppHash(appHash)
+			return appHash, checkAppHash(state, appHash)
 		}
 
 	} else if storeBlockHeight == stateBlockHeight+1 {
@@ -289,7 +292,7 @@ func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp
 		if appBlockHeight < stateBlockHeight {
 			// the app is further behind than it should be, so replay blocks
 			// but leave the last block to go through the WAL
-			return h.replayBlocks(proxyApp, appBlockHeight, storeBlockHeight, true)
+			return h.replayBlocks(state, proxyApp, appBlockHeight, storeBlockHeight, true)
 
 		} else if appBlockHeight == stateBlockHeight {
 			// We haven't run Commit (both the state and app are one block behind),
@@ -297,17 +300,19 @@ func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp
 			// NOTE: We could instead use the cs.WAL on cs.Start,
 			// but we'd have to allow the WAL to replay a block that wrote it's ENDHEIGHT
 			h.logger.Info("Replay last block using real app")
-			return h.replayBlock(storeBlockHeight, proxyApp.Consensus())
+			state, err = h.replayBlock(state, storeBlockHeight, proxyApp.Consensus())
+			return state.AppHash, err
 
 		} else if appBlockHeight == storeBlockHeight {
 			// We ran Commit, but didn't save the state, so replayBlock with mock app
-			abciResponses, err := sm.LoadABCIResponses(h.state.DB(), storeBlockHeight)
+			abciResponses, err := sm.LoadABCIResponses(h.stateDB, storeBlockHeight)
 			if err != nil {
 				return nil, err
 			}
 			mockApp := newMockProxyApp(appHash, abciResponses)
 			h.logger.Info("Replay last block using mock app")
-			return h.replayBlock(storeBlockHeight, mockApp)
+			state, err = h.replayBlock(state, storeBlockHeight, mockApp)
+			return state.AppHash, err
 		}
 
 	}
@@ -316,7 +321,7 @@ func (h *Handshaker) ReplayBlocks(appHash []byte, appBlockHeight int64, proxyApp
 	return nil, nil
 }
 
-func (h *Handshaker) replayBlocks(proxyApp proxy.AppConns, appBlockHeight, storeBlockHeight int64, mutateState bool) ([]byte, error) {
+func (h *Handshaker) replayBlocks(state sm.State, proxyApp proxy.AppConns, appBlockHeight, storeBlockHeight int64, mutateState bool) ([]byte, error) {
 	// App is further behind than it should be, so we need to replay blocks.
 	// We replay all blocks from appBlockHeight+1.
 	//
@@ -336,7 +341,7 @@ func (h *Handshaker) replayBlocks(proxyApp proxy.AppConns, appBlockHeight, store
 	for i := appBlockHeight + 1; i <= finalBlock; i++ {
 		h.logger.Info("Applying block", "height", i)
 		block := h.store.LoadBlock(i)
-		appHash, err = sm.ExecCommitBlock(proxyApp.Consensus(), block, h.logger, h.state.LastValidators)
+		appHash, err = sm.ExecCommitBlock(proxyApp.Consensus(), block, h.logger)
 		if err != nil {
 			return nil, err
 		}
@@ -346,33 +351,41 @@ func (h *Handshaker) replayBlocks(proxyApp proxy.AppConns, appBlockHeight, store
 
 	if mutateState {
 		// sync the final block
-		return h.replayBlock(storeBlockHeight, proxyApp.Consensus())
+		state, err = h.replayBlock(state, storeBlockHeight, proxyApp.Consensus())
+		if err != nil {
+			return nil, err
+		}
+		appHash = state.AppHash
 	}
 
-	return appHash, h.checkAppHash(appHash)
+	return appHash, checkAppHash(state, appHash)
 }
 
 // ApplyBlock on the proxyApp with the last block.
-func (h *Handshaker) replayBlock(height int64, proxyApp proxy.AppConnConsensus) ([]byte, error) {
+func (h *Handshaker) replayBlock(state sm.State, height int64, proxyApp proxy.AppConnConsensus) (sm.State, error) {
 	mempool := types.MockMempool{}
 	evpool := types.MockEvidencePool{}
 
 	block := h.store.LoadBlock(height)
 	meta := h.store.LoadBlockMeta(height)
 
-	if err := h.state.ApplyBlock(types.NopEventBus{}, proxyApp,
-		block, meta.BlockID.PartsHeader, mempool, evpool); err != nil {
-		return nil, err
+	blockExec := sm.NewBlockExecutor(h.stateDB, h.logger,
+		types.NopEventBus{}, proxyApp, mempool, evpool)
+
+	var err error
+	state, err = blockExec.ApplyBlock(state, meta.BlockID, block)
+	if err != nil {
+		return sm.State{}, err
 	}
 
 	h.nBlocks += 1
 
-	return h.state.AppHash, nil
+	return state, nil
 }
 
-func (h *Handshaker) checkAppHash(appHash []byte) error {
-	if !bytes.Equal(h.state.AppHash, appHash) {
-		panic(fmt.Errorf("Tendermint state.AppHash does not match AppHash after replay. Got %X, expected %X", appHash, h.state.AppHash).Error())
+func checkAppHash(state sm.State, appHash []byte) error {
+	if !bytes.Equal(state.AppHash, appHash) {
+		panic(fmt.Errorf("Tendermint state.AppHash does not match AppHash after replay. Got %X, expected %X", appHash, state.AppHash).Error())
 	}
 	return nil
 }
diff --git a/consensus/replay_file.go b/consensus/replay_file.go
index 4db58ada8..d832abad4 100644
--- a/consensus/replay_file.go
+++ b/consensus/replay_file.go
@@ -18,6 +18,7 @@ import (
 	"github.com/tendermint/tendermint/types"
 	cmn "github.com/tendermint/tmlibs/common"
 	dbm "github.com/tendermint/tmlibs/db"
+	"github.com/tendermint/tmlibs/log"
 )
 
 const (
@@ -104,11 +105,11 @@ type playback struct {
 	count int // how many lines/msgs into the file are we
 
 	// replays can be reset to beginning
-	fileName     string    // so we can close/reopen the file
-	genesisState *sm.State // so the replay session knows where to restart from
+	fileName     string   // so we can close/reopen the file
+	genesisState sm.State // so the replay session knows where to restart from
 }
 
-func newPlayback(fileName string, fp *os.File, cs *ConsensusState, genState *sm.State) *playback {
+func newPlayback(fileName string, fp *os.File, cs *ConsensusState, genState sm.State) *playback {
 	return &playback{
 		cs:           cs,
 		fp:           fp,
@@ -123,7 +124,7 @@ func (pb *playback) replayReset(count int, newStepCh chan interface{}) error {
 	pb.cs.Stop()
 	pb.cs.Wait()
 
-	newCS := NewConsensusState(pb.cs.config, pb.genesisState.Copy(), pb.cs.proxyAppConn,
+	newCS := NewConsensusState(pb.cs.config, pb.genesisState.Copy(), pb.cs.blockExec,
 		pb.cs.blockStore, pb.cs.mempool, pb.cs.evpool)
 	newCS.SetEventBus(pb.cs.eventBus)
 	newCS.startForReplay()
@@ -285,14 +286,14 @@ func newConsensusStateForReplay(config cfg.BaseConfig, csConfig *cfg.ConsensusCo
 
 	// Get State
 	stateDB := dbm.NewDB("state", config.DBBackend, config.DBDir())
-	state, err := sm.MakeGenesisStateFromFile(stateDB, config.GenesisFile())
+	state, err := sm.MakeGenesisStateFromFile(config.GenesisFile())
 	if err != nil {
 		cmn.Exit(err.Error())
 	}
 
 	// Create proxyAppConn connection (consensus, mempool, query)
 	clientCreator := proxy.DefaultClientCreator(config.ProxyApp, config.ABCI, config.DBDir())
-	proxyApp := proxy.NewAppConns(clientCreator, NewHandshaker(state, blockStore))
+	proxyApp := proxy.NewAppConns(clientCreator, NewHandshaker(stateDB, state, blockStore))
 	err = proxyApp.Start()
 	if err != nil {
 		cmn.Exit(cmn.Fmt("Error starting proxy app conns: %v", err))
@@ -303,8 +304,13 @@ func newConsensusStateForReplay(config cfg.BaseConfig, csConfig *cfg.ConsensusCo
 		cmn.Exit(cmn.Fmt("Failed to start event bus: %v", err))
 	}
 
-	consensusState := NewConsensusState(csConfig, state.Copy(), proxyApp.Consensus(),
-		blockStore, types.MockMempool{}, types.MockEvidencePool{})
+	mempool, evpool := types.MockMempool{}, types.MockEvidencePool{}
+	blockExec := sm.NewBlockExecutor(stateDB, log.TestingLogger(),
+		nil, proxyApp.Consensus(),
+		mempool, evpool)
+
+	consensusState := NewConsensusState(csConfig, state.Copy(), blockExec,
+		blockStore, mempool, evpool)
 
 	consensusState.SetEventBus(eventBus)
 	return consensusState
diff --git a/consensus/replay_test.go b/consensus/replay_test.go
index f1a060ec1..4647ff3d6 100644
--- a/consensus/replay_test.go
+++ b/consensus/replay_test.go
@@ -54,7 +54,6 @@ func init() {
 func startNewConsensusStateAndWaitForBlock(t *testing.T, lastBlockHeight int64, blockDB dbm.DB, stateDB dbm.DB) {
 	logger := log.TestingLogger()
 	state, _ := sm.GetState(stateDB, consensusReplayConfig.GenesisFile())
-	state.SetLogger(logger.With("module", "state"))
 	privValidator := loadPrivValidator(consensusReplayConfig)
 	cs := newConsensusStateWithConfigAndBlockStore(consensusReplayConfig, state, privValidator, dummy.NewDummyApplication(), blockDB)
 	cs.SetLogger(logger)
@@ -98,22 +97,22 @@ func sendTxs(cs *ConsensusState, ctx context.Context) {
 func TestWALCrash(t *testing.T) {
 	testCases := []struct {
 		name         string
-		initFn       func(*ConsensusState, context.Context)
+		initFn       func(dbm.DB, *ConsensusState, context.Context)
 		heightToStop int64
 	}{
 		{"empty block",
-			func(cs *ConsensusState, ctx context.Context) {},
+			func(stateDB dbm.DB, cs *ConsensusState, ctx context.Context) {},
 			1},
 		{"block with a smaller part size",
-			func(cs *ConsensusState, ctx context.Context) {
+			func(stateDB dbm.DB, cs *ConsensusState, ctx context.Context) {
 				// XXX: is there a better way to change BlockPartSizeBytes?
 				cs.state.ConsensusParams.BlockPartSizeBytes = 512
-				cs.state.Save()
+				sm.SaveState(stateDB, cs.state)
 				go sendTxs(cs, ctx)
 			},
 			1},
 		{"many non-empty blocks",
-			func(cs *ConsensusState, ctx context.Context) {
+			func(stateDB dbm.DB, cs *ConsensusState, ctx context.Context) {
 				go sendTxs(cs, ctx)
 			},
 			3},
@@ -126,7 +125,7 @@ func TestWALCrash(t *testing.T) {
 	}
 }
 
-func crashWALandCheckLiveness(t *testing.T, initFn func(*ConsensusState, context.Context), heightToStop int64) {
+func crashWALandCheckLiveness(t *testing.T, initFn func(dbm.DB, *ConsensusState, context.Context), heightToStop int64) {
 	walPaniced := make(chan error)
 	crashingWal := &crashingWAL{panicCh: walPaniced, heightToStop: heightToStop}
 
@@ -139,8 +138,7 @@ LOOP:
 		// create consensus state from a clean slate
 		logger := log.NewNopLogger()
 		stateDB := dbm.NewMemDB()
-		state, _ := sm.MakeGenesisStateFromFile(stateDB, consensusReplayConfig.GenesisFile())
-		state.SetLogger(logger.With("module", "state"))
+		state, _ := sm.MakeGenesisStateFromFile(consensusReplayConfig.GenesisFile())
 		privValidator := loadPrivValidator(consensusReplayConfig)
 		blockDB := dbm.NewMemDB()
 		cs := newConsensusStateWithConfigAndBlockStore(consensusReplayConfig, state, privValidator, dummy.NewDummyApplication(), blockDB)
@@ -148,7 +146,7 @@ LOOP:
 
 		// start sending transactions
 		ctx, cancel := context.WithCancel(context.Background())
-		initFn(cs, ctx)
+		initFn(stateDB, cs, ctx)
 
 		// clean up WAL file from the previous iteration
 		walFile := cs.config.WalFile()
@@ -344,12 +342,13 @@ func testHandshakeReplay(t *testing.T, nBlocks int, mode uint) {
 		t.Fatalf(err.Error())
 	}
 
-	state, store := stateAndStore(config, privVal.GetPubKey())
+	stateDB, state, store := stateAndStore(config, privVal.GetPubKey())
 	store.chain = chain
 	store.commits = commits
 
 	// run the chain through state.ApplyBlock to build up the tendermint state
-	latestAppHash := buildTMStateFromChain(config, state, chain, mode)
+	state = buildTMStateFromChain(config, stateDB, state, chain, mode)
+	latestAppHash := state.AppHash
 
 	// make a new client creator
 	dummyApp := dummy.NewPersistentDummyApplication(path.Join(config.DBDir(), "2"))
@@ -358,12 +357,12 @@ func testHandshakeReplay(t *testing.T, nBlocks int, mode uint) {
 		// run nBlocks against a new client to build up the app state.
 		// use a throwaway tendermint state
 		proxyApp := proxy.NewAppConns(clientCreator2, nil)
-		state, _ := stateAndStore(config, privVal.GetPubKey())
-		buildAppStateFromChain(proxyApp, state, chain, nBlocks, mode)
+		stateDB, state, _ := stateAndStore(config, privVal.GetPubKey())
+		buildAppStateFromChain(proxyApp, stateDB, state, chain, nBlocks, mode)
 	}
 
 	// now start the app using the handshake - it should sync
-	handshaker := NewHandshaker(state, store)
+	handshaker := NewHandshaker(stateDB, state, store)
 	proxyApp := proxy.NewAppConns(clientCreator2, handshaker)
 	if err := proxyApp.Start(); err != nil {
 		t.Fatalf("Error starting proxy app connections: %v", err)
@@ -393,16 +392,21 @@ func testHandshakeReplay(t *testing.T, nBlocks int, mode uint) {
 	}
 }
 
-func applyBlock(st *sm.State, blk *types.Block, proxyApp proxy.AppConns) {
+func applyBlock(stateDB dbm.DB, st sm.State, blk *types.Block, proxyApp proxy.AppConns) sm.State {
 	testPartSize := st.ConsensusParams.BlockPartSizeBytes
-	err := st.ApplyBlock(types.NopEventBus{}, proxyApp.Consensus(), blk, blk.MakePartSet(testPartSize).Header(), mempool, evpool)
+	blockExec := sm.NewBlockExecutor(stateDB, log.TestingLogger(),
+		types.NopEventBus{}, proxyApp.Consensus(), mempool, evpool)
+
+	blkID := types.BlockID{blk.Hash(), blk.MakePartSet(testPartSize).Header()}
+	newState, err := blockExec.ApplyBlock(st, blkID, blk)
 	if err != nil {
 		panic(err)
 	}
+	return newState
 }
 
-func buildAppStateFromChain(proxyApp proxy.AppConns,
-	state *sm.State, chain []*types.Block, nBlocks int, mode uint) {
+func buildAppStateFromChain(proxyApp proxy.AppConns, stateDB dbm.DB,
+	state sm.State, chain []*types.Block, nBlocks int, mode uint) {
 	// start a new app without handshake, play nBlocks blocks
 	if err := proxyApp.Start(); err != nil {
 		panic(err)
@@ -418,24 +422,24 @@ func buildAppStateFromChain(proxyApp proxy.AppConns,
 	case 0:
 		for i := 0; i < nBlocks; i++ {
 			block := chain[i]
-			applyBlock(state, block, proxyApp)
+			state = applyBlock(stateDB, state, block, proxyApp)
 		}
 	case 1, 2:
 		for i := 0; i < nBlocks-1; i++ {
 			block := chain[i]
-			applyBlock(state, block, proxyApp)
+			state = applyBlock(stateDB, state, block, proxyApp)
 		}
 
 		if mode == 2 {
 			// update the dummy height and apphash
 			// as if we ran commit but not
-			applyBlock(state, chain[nBlocks-1], proxyApp)
+			state = applyBlock(stateDB, state, chain[nBlocks-1], proxyApp)
 		}
 	}
 
 }
 
-func buildTMStateFromChain(config *cfg.Config, state *sm.State, chain []*types.Block, mode uint) []byte {
+func buildTMStateFromChain(config *cfg.Config, stateDB dbm.DB, state sm.State, chain []*types.Block, mode uint) sm.State {
 	// run the whole chain against this client to build up the tendermint state
 	clientCreator := proxy.NewLocalClientCreator(dummy.NewPersistentDummyApplication(path.Join(config.DBDir(), "1")))
 	proxyApp := proxy.NewAppConns(clientCreator, nil) // sm.NewHandshaker(config, state, store, ReplayLastBlock))
@@ -449,31 +453,26 @@ func buildTMStateFromChain(config *cfg.Config, state *sm.State, chain []*types.B
 		panic(err)
 	}
 
-	var latestAppHash []byte
-
 	switch mode {
 	case 0:
 		// sync right up
 		for _, block := range chain {
-			applyBlock(state, block, proxyApp)
+			state = applyBlock(stateDB, state, block, proxyApp)
 		}
 
-		latestAppHash = state.AppHash
 	case 1, 2:
 		// sync up to the penultimate as if we stored the block.
 		// whether we commit or not depends on the appHash
 		for _, block := range chain[:len(chain)-1] {
-			applyBlock(state, block, proxyApp)
+			state = applyBlock(stateDB, state, block, proxyApp)
 		}
 
 		// apply the final block to a state copy so we can
 		// get the right next appHash but keep the state back
-		stateCopy := state.Copy()
-		applyBlock(stateCopy, chain[len(chain)-1], proxyApp)
-		latestAppHash = stateCopy.AppHash
+		applyBlock(stateDB, state, chain[len(chain)-1], proxyApp)
 	}
 
-	return latestAppHash
+	return state
 }
 
 //--------------------------
@@ -587,13 +586,11 @@ func readPieceFromWAL(msg *TimedWALMessage) interface{} {
 }
 
 // fresh state and mock store
-func stateAndStore(config *cfg.Config, pubKey crypto.PubKey) (*sm.State, *mockBlockStore) {
+func stateAndStore(config *cfg.Config, pubKey crypto.PubKey) (dbm.DB, sm.State, *mockBlockStore) {
 	stateDB := dbm.NewMemDB()
-	state, _ := sm.MakeGenesisStateFromFile(stateDB, config.GenesisFile())
-	state.SetLogger(log.TestingLogger().With("module", "state"))
-
+	state, _ := sm.MakeGenesisStateFromFile(config.GenesisFile())
 	store := NewMockBlockStore(config, state.ConsensusParams)
-	return state, store
+	return stateDB, state, store
 }
 
 //----------------------------------
diff --git a/consensus/state.go b/consensus/state.go
index 5e83e6a56..477d872b0 100644
--- a/consensus/state.go
+++ b/consensus/state.go
@@ -17,7 +17,6 @@ import (
 
 	cfg "github.com/tendermint/tendermint/config"
 	cstypes "github.com/tendermint/tendermint/consensus/types"
-	"github.com/tendermint/tendermint/proxy"
 	sm "github.com/tendermint/tendermint/state"
 	"github.com/tendermint/tendermint/types"
 )
@@ -75,15 +74,16 @@ type ConsensusState struct {
 	privValidator types.PrivValidator // for signing votes
 
 	// services for creating and executing blocks
-	proxyAppConn proxy.AppConnConsensus
-	blockStore   types.BlockStore
-	mempool      types.Mempool
-	evpool       types.EvidencePool
+	// TODO: encapsulate all of this in one "BlockManager"
+	blockExec  *sm.BlockExecutor
+	blockStore types.BlockStore
+	mempool    types.Mempool
+	evpool     types.EvidencePool
 
 	// internal state
 	mtx sync.Mutex
 	cstypes.RoundState
-	state *sm.State // State until height-1.
+	state sm.State // State until height-1.
 
 	// state changes may be triggered by msgs from peers,
 	// msgs from ourself, or by timeouts
@@ -114,10 +114,10 @@ type ConsensusState struct {
 }
 
 // NewConsensusState returns a new ConsensusState.
-func NewConsensusState(config *cfg.ConsensusConfig, state *sm.State, proxyAppConn proxy.AppConnConsensus, blockStore types.BlockStore, mempool types.Mempool, evpool types.EvidencePool) *ConsensusState {
+func NewConsensusState(config *cfg.ConsensusConfig, state sm.State, blockExec *sm.BlockExecutor, blockStore types.BlockStore, mempool types.Mempool, evpool types.EvidencePool) *ConsensusState {
 	cs := &ConsensusState{
 		config:           config,
-		proxyAppConn:     proxyAppConn,
+		blockExec:        blockExec,
 		blockStore:       blockStore,
 		mempool:          mempool,
 		peerMsgQueue:     make(chan msgInfo, msgQueueSize),
@@ -162,7 +162,7 @@ func (cs *ConsensusState) String() string {
 }
 
 // GetState returns a copy of the chain state.
-func (cs *ConsensusState) GetState() *sm.State {
+func (cs *ConsensusState) GetState() sm.State {
 	cs.mtx.Lock()
 	defer cs.mtx.Unlock()
 	return cs.state.Copy()
@@ -399,7 +399,7 @@ func (cs *ConsensusState) sendInternalMessage(mi msgInfo) {
 
 // Reconstruct LastCommit from SeenCommit, which we saved along with the block,
 // (which happens even before saving the state)
-func (cs *ConsensusState) reconstructLastCommit(state *sm.State) {
+func (cs *ConsensusState) reconstructLastCommit(state sm.State) {
 	if state.LastBlockHeight == 0 {
 		return
 	}
@@ -422,12 +422,12 @@ func (cs *ConsensusState) reconstructLastCommit(state *sm.State) {
 
 // Updates ConsensusState and increments height to match that of state.
 // The round becomes 0 and cs.Step becomes cstypes.RoundStepNewHeight.
-func (cs *ConsensusState) updateToState(state *sm.State) {
+func (cs *ConsensusState) updateToState(state sm.State) {
 	if cs.CommitRound > -1 && 0 < cs.Height && cs.Height != state.LastBlockHeight {
 		cmn.PanicSanity(cmn.Fmt("updateToState() expected state height of %v but found %v",
 			cs.Height, state.LastBlockHeight))
 	}
-	if cs.state != nil && cs.state.LastBlockHeight+1 != cs.Height {
+	if !cs.state.IsEmpty() && cs.state.LastBlockHeight+1 != cs.Height {
 		// This might happen when someone else is mutating cs.state.
 		// Someone forgot to pass in state.Copy() somewhere?!
 		cmn.PanicSanity(cmn.Fmt("Inconsistent cs.state.LastBlockHeight+1 %v vs cs.Height %v",
@@ -437,7 +437,7 @@ func (cs *ConsensusState) updateToState(state *sm.State) {
 	// If state isn't further out than cs.state, just ignore.
 	// This happens when SwitchToConsensus() is called in the reactor.
 	// We don't want to reset e.g. the Votes.
-	if cs.state != nil && (state.LastBlockHeight <= cs.state.LastBlockHeight) {
+	if !cs.state.IsEmpty() && (state.LastBlockHeight <= cs.state.LastBlockHeight) {
 		cs.Logger.Info("Ignoring updateToState()", "newHeight", state.LastBlockHeight+1, "oldHeight", cs.state.LastBlockHeight+1)
 		return
 	}
@@ -922,7 +922,7 @@ func (cs *ConsensusState) defaultDoPrevote(height int64, round int) {
 	}
 
 	// Validate proposal block
-	err := cs.state.ValidateBlock(cs.ProposalBlock)
+	err := sm.ValidateBlock(cs.state, cs.ProposalBlock)
 	if err != nil {
 		// ProposalBlock is invalid, prevote nil.
 		logger.Error("enterPrevote: ProposalBlock is invalid", "err", err)
@@ -1030,7 +1030,7 @@ func (cs *ConsensusState) enterPrecommit(height int64, round int) {
 	if cs.ProposalBlock.HashesTo(blockID.Hash) {
 		cs.Logger.Info("enterPrecommit: +2/3 prevoted proposal block. Locking", "hash", blockID.Hash)
 		// Validate the block.
-		if err := cs.state.ValidateBlock(cs.ProposalBlock); err != nil {
+		if err := sm.ValidateBlock(cs.state, cs.ProposalBlock); err != nil {
 			cmn.PanicConsensus(cmn.Fmt("enterPrecommit: +2/3 prevoted for an invalid block: %v", err))
 		}
 		cs.LockedRound = round
@@ -1165,7 +1165,7 @@ func (cs *ConsensusState) finalizeCommit(height int64) {
 	if !block.HashesTo(blockID.Hash) {
 		cmn.PanicSanity(cmn.Fmt("Cannot finalizeCommit, ProposalBlock does not hash to commit hash"))
 	}
-	if err := cs.state.ValidateBlock(block); err != nil {
+	if err := sm.ValidateBlock(cs.state, block); err != nil {
 		cmn.PanicConsensus(cmn.Fmt("+2/3 committed an invalid block: %v", err))
 	}
 
@@ -1204,13 +1204,12 @@ func (cs *ConsensusState) finalizeCommit(height int64) {
 	// and an event cache for txs
 	stateCopy := cs.state.Copy()
 	txEventBuffer := types.NewTxEventBuffer(cs.eventBus, int(block.NumTxs))
+	cs.blockExec.SetTxEventPublisher(txEventBuffer)
 
 	// Execute and commit the block, update and save the state, and update the mempool.
-	// All calls to the proxyAppConn come here.
 	// NOTE: the block.AppHash wont reflect these txs until the next block
-	err := stateCopy.ApplyBlock(txEventBuffer, cs.proxyAppConn,
-		block, blockParts.Header(),
-		cs.mempool, cs.evpool)
+	var err error
+	stateCopy, err = cs.blockExec.ApplyBlock(stateCopy, types.BlockID{block.Hash(), blockParts.Header()}, block)
 	if err != nil {
 		cs.Logger.Error("Error on ApplyBlock. Did the application crash? Please restart tendermint", "err", err)
 		err := cmn.Kill()
diff --git a/consensus/wal_generator.go b/consensus/wal_generator.go
index 73ad3e7fc..fe9066b3f 100644
--- a/consensus/wal_generator.go
+++ b/consensus/wal_generator.go
@@ -47,13 +47,12 @@ func WALWithNBlocks(numBlocks int) (data []byte, err error) {
 	}
 	stateDB := db.NewMemDB()
 	blockStoreDB := db.NewMemDB()
-	state, err := sm.MakeGenesisState(stateDB, genDoc)
-	state.SetLogger(logger.With("module", "state"))
+	state, err := sm.MakeGenesisState(genDoc)
 	if err != nil {
 		return nil, errors.Wrap(err, "failed to make genesis state")
 	}
 	blockStore := bc.NewBlockStore(blockStoreDB)
-	handshaker := NewHandshaker(state, blockStore)
+	handshaker := NewHandshaker(stateDB, state, blockStore)
 	proxyApp := proxy.NewAppConns(proxy.NewLocalClientCreator(app), handshaker)
 	proxyApp.SetLogger(logger.With("module", "proxy"))
 	if err := proxyApp.Start(); err != nil {
@@ -68,7 +67,8 @@ func WALWithNBlocks(numBlocks int) (data []byte, err error) {
 	defer eventBus.Stop()
 	mempool := types.MockMempool{}
 	evpool := types.MockEvidencePool{}
-	consensusState := NewConsensusState(config.Consensus, state.Copy(), proxyApp.Consensus(), blockStore, mempool, evpool)
+	blockExec := sm.NewBlockExecutor(stateDB, log.TestingLogger(), nil, proxyApp.Consensus(), mempool, evpool)
+	consensusState := NewConsensusState(config.Consensus, state.Copy(), blockExec, blockStore, mempool, evpool)
 	consensusState.SetLogger(logger)
 	consensusState.SetEventBus(eventBus)
 	if privValidator != nil {
diff --git a/evidence/pool.go b/evidence/pool.go
index 381801df3..2e7cd4704 100644
--- a/evidence/pool.go
+++ b/evidence/pool.go
@@ -21,13 +21,13 @@ type EvidencePool struct {
 	evidenceChan chan types.Evidence
 }
 
-func NewEvidencePool(params types.EvidenceParams, evidenceStore *EvidenceStore, state types.State) *EvidencePool {
+func NewEvidencePool(params types.EvidenceParams, evidenceStore *EvidenceStore) *EvidencePool {
 	evpool := &EvidencePool{
 		params:        params,
 		logger:        log.NewNopLogger(),
 		evidenceStore: evidenceStore,
-		state:         *state,
-		evidenceChan:  make(chan types.Evidence),
+		// state:         *state,
+		evidenceChan: make(chan types.Evidence),
 	}
 	return evpool
 }
@@ -58,12 +58,15 @@ func (evpool *EvidencePool) AddEvidence(evidence types.Evidence) (err error) {
 	// TODO: check if we already have evidence for this
 	// validator at this height so we dont get spammed
 
-	priority, err := sm.VerifyEvidence(evpool.state, evidence)
-	if err != nil {
-		// TODO: if err is just that we cant find it cuz we pruned, ignore.
-		// TODO: if its actually bad evidence, punish peer
-		return err
-	}
+	// TODO
+	var priority int64
+	/*
+		priority, err := sm.VerifyEvidence(evpool.state, evidence)
+		if err != nil {
+			// TODO: if err is just that we cant find it cuz we pruned, ignore.
+			// TODO: if its actually bad evidence, punish peer
+			return err
+		}*/
 
 	added := evpool.evidenceStore.AddNewEvidence(evidence, priority)
 	if !added {
diff --git a/node/node.go b/node/node.go
index 53eab6e0e..15e4f0432 100644
--- a/node/node.go
+++ b/node/node.go
@@ -102,7 +102,8 @@ type Node struct {
 	trustMetricStore *trust.TrustMetricStore // trust metrics for all peers
 
 	// services
-	eventBus         *types.EventBus             // pub/sub for services
+	eventBus         *types.EventBus // pub/sub for services
+	stateDB          dbm.DB
 	blockStore       *bc.BlockStore              // store the blockchain to disk
 	bcReactor        *bc.BlockchainReactor       // for fast-syncing
 	mempoolReactor   *mempl.MempoolReactor       // for gossipping transactions
@@ -148,21 +149,20 @@ func NewNode(config *cfg.Config,
 		saveGenesisDoc(stateDB, genDoc)
 	}
 
-	stateLogger := logger.With("module", "state")
 	state := sm.LoadState(stateDB)
-	if state == nil {
-		state, err = sm.MakeGenesisState(stateDB, genDoc)
+	if state.IsEmpty() {
+		state, err = sm.MakeGenesisState(genDoc)
 		if err != nil {
 			return nil, err
 		}
-		state.Save()
+		sm.SaveState(stateDB, state)
 	}
-	state.SetLogger(stateLogger)
 
 	// Create the proxyApp, which manages connections (consensus, mempool, query)
-	// and sync tendermint and the app by replaying any necessary blocks
+	// and sync tendermint and the app by performing a handshake
+	// and replaying any necessary blocks
 	consensusLogger := logger.With("module", "consensus")
-	handshaker := consensus.NewHandshaker(state, blockStore)
+	handshaker := consensus.NewHandshaker(stateDB, state, blockStore)
 	handshaker.SetLogger(consensusLogger)
 	proxyApp := proxy.NewAppConns(clientCreator, handshaker)
 	proxyApp.SetLogger(logger.With("module", "proxy"))
@@ -172,7 +172,6 @@ func NewNode(config *cfg.Config,
 
 	// reload the state (it may have been updated by the handshake)
 	state = sm.LoadState(stateDB)
-	state.SetLogger(stateLogger)
 
 	// Generate node PrivKey
 	privKey := crypto.GenPrivKeyEd25519()
@@ -194,10 +193,6 @@ func NewNode(config *cfg.Config,
 		consensusLogger.Info("This node is not a validator")
 	}
 
-	// Make BlockchainReactor
-	bcReactor := bc.NewBlockchainReactor(state.Copy(), proxyApp.Consensus(), blockStore, fastSync)
-	bcReactor.SetLogger(logger.With("module", "blockchain"))
-
 	// Make MempoolReactor
 	mempoolLogger := logger.With("module", "mempool")
 	mempool := mempl.NewMempool(config.Mempool, proxyApp.Mempool(), state.LastBlockHeight)
@@ -216,14 +211,24 @@ func NewNode(config *cfg.Config,
 	}
 	evidenceLogger := logger.With("module", "evidence")
 	evidenceStore := evidence.NewEvidenceStore(evidenceDB)
-	evidencePool := evidence.NewEvidencePool(state.ConsensusParams.EvidenceParams, evidenceStore, state.Copy())
+	evidencePool := evidence.NewEvidencePool(state.ConsensusParams.EvidenceParams, evidenceStore) // , state.Copy())
 	evidencePool.SetLogger(evidenceLogger)
 	evidenceReactor := evidence.NewEvidenceReactor(evidencePool)
 	evidenceReactor.SetLogger(evidenceLogger)
 
+	blockExecLogger := logger.With("module", "state")
+	// make block executor for consensus and blockchain reactors to execute blocks
+	blockExec := sm.NewBlockExecutor(stateDB, blockExecLogger,
+		nil, proxyApp.Consensus(),
+		mempool, evidencePool)
+
+	// Make BlockchainReactor
+	bcReactor := bc.NewBlockchainReactor(state.Copy(), blockExec, blockStore, fastSync)
+	bcReactor.SetLogger(logger.With("module", "blockchain"))
+
 	// Make ConsensusReactor
 	consensusState := consensus.NewConsensusState(config.Consensus, state.Copy(),
-		proxyApp.Consensus(), blockStore, mempool, evidencePool)
+		blockExec, blockStore, mempool, evidencePool)
 	consensusState.SetLogger(consensusLogger)
 	if privValidator != nil {
 		consensusState.SetPrivValidator(privValidator)
@@ -291,7 +296,6 @@ func NewNode(config *cfg.Config,
 	eventBus.SetLogger(logger.With("module", "events"))
 
 	// services which will be publishing and/or subscribing for messages (events)
-	bcReactor.SetEventBus(eventBus)
 	consensusReactor.SetEventBus(eventBus)
 
 	// Transaction indexing
@@ -333,6 +337,7 @@ func NewNode(config *cfg.Config,
 		addrBook:         addrBook,
 		trustMetricStore: trustMetricStore,
 
+		stateDB:          stateDB,
 		blockStore:       blockStore,
 		bcReactor:        bcReactor,
 		mempoolReactor:   mempoolReactor,
@@ -429,6 +434,7 @@ func (n *Node) AddListener(l p2p.Listener) {
 // ConfigureRPC sets all variables in rpccore so they will serve
 // rpc calls from this node
 func (n *Node) ConfigureRPC() {
+	rpccore.SetStateDB(n.stateDB)
 	rpccore.SetBlockStore(n.blockStore)
 	rpccore.SetConsensusState(n.consensusState)
 	rpccore.SetMempool(n.mempoolReactor.Mempool)
diff --git a/rpc/core/blocks.go b/rpc/core/blocks.go
index 8b0ee4592..853bb0f7b 100644
--- a/rpc/core/blocks.go
+++ b/rpc/core/blocks.go
@@ -337,8 +337,7 @@ func BlockResults(heightPtr *int64) (*ctypes.ResultBlockResults, error) {
 	}
 
 	// load the results
-	state := consensusState.GetState()
-	results, err := sm.LoadABCIResponses(state.DB(), height)
+	results, err := sm.LoadABCIResponses(stateDB, height)
 	if err != nil {
 		return nil, err
 	}
diff --git a/rpc/core/consensus.go b/rpc/core/consensus.go
index eedcce277..65c9fc364 100644
--- a/rpc/core/consensus.go
+++ b/rpc/core/consensus.go
@@ -50,8 +50,7 @@ func Validators(heightPtr *int64) (*ctypes.ResultValidators, error) {
 		return nil, err
 	}
 
-	state := consensusState.GetState()
-	validators, err := sm.LoadValidators(state.DB(), height)
+	validators, err := sm.LoadValidators(stateDB, height)
 	if err != nil {
 		return nil, err
 	}
diff --git a/rpc/core/pipe.go b/rpc/core/pipe.go
index 325625c79..927d7ccad 100644
--- a/rpc/core/pipe.go
+++ b/rpc/core/pipe.go
@@ -11,6 +11,7 @@ import (
 	sm "github.com/tendermint/tendermint/state"
 	"github.com/tendermint/tendermint/state/txindex"
 	"github.com/tendermint/tendermint/types"
+	dbm "github.com/tendermint/tmlibs/db"
 	"github.com/tendermint/tmlibs/log"
 )
 
@@ -20,7 +21,7 @@ var subscribeTimeout = 5 * time.Second
 // These interfaces are used by RPC and must be thread safe
 
 type Consensus interface {
-	GetState() *sm.State
+	GetState() sm.State
 	GetValidators() (int64, []*types.Validator)
 	GetRoundState() *cstypes.RoundState
 }
@@ -43,6 +44,7 @@ var (
 	proxyAppQuery proxy.AppConnQuery
 
 	// interfaces defined in types and above
+	stateDB        dbm.DB
 	blockStore     types.BlockStore
 	mempool        types.Mempool
 	evidencePool   types.EvidencePool
@@ -60,6 +62,10 @@ var (
 	logger log.Logger
 )
 
+func SetStateDB(db dbm.DB) {
+	stateDB = db
+}
+
 func SetBlockStore(bs types.BlockStore) {
 	blockStore = bs
 }
diff --git a/state/db.go b/state/db.go
index 32f625841..fbe99863b 100644
--- a/state/db.go
+++ b/state/db.go
@@ -36,7 +36,7 @@ func GetState(stateDB dbm.DB, genesisFile string) (State, error) {
 		if err != nil {
 			return state, err
 		}
-		SaveState(stateDB, state, state.AppHash)
+		SaveState(stateDB, state)
 	}
 
 	return state, nil
@@ -66,9 +66,7 @@ func loadState(db dbm.DB, key []byte) (state State) {
 }
 
 // SaveState persists the State, the ValidatorsInfo, and the ConsensusParamsInfo to the database.
-// It sets the given appHash on the state before persisting.
-func SaveState(db dbm.DB, s State, appHash []byte) {
-	s.AppHash = appHash
+func SaveState(db dbm.DB, s State) {
 	nextHeight := s.LastBlockHeight + 1
 	saveValidatorsInfo(db, nextHeight, s.LastHeightValidatorsChanged, s.Validators)
 	saveConsensusParamsInfo(db, nextHeight, s.LastHeightConsensusParamsChanged, s.ConsensusParams)
diff --git a/state/execution.go b/state/execution.go
index 88ee1127a..ce45e4c43 100644
--- a/state/execution.go
+++ b/state/execution.go
@@ -30,6 +30,10 @@ type BlockExecutor struct {
 	evpool  types.EvidencePool
 }
 
+func (blockExec *BlockExecutor) SetTxEventPublisher(txEventPublisher types.TxEventPublisher) {
+	blockExec.txEventPublisher = txEventPublisher
+}
+
 // NewBlockExecutor returns a new BlockExecutor.
 func NewBlockExecutor(db dbm.DB, logger log.Logger,
 	txEventer types.TxEventPublisher, proxyApp proxy.AppConnConsensus,
@@ -82,8 +86,9 @@ func (blockExec *BlockExecutor) ApplyBlock(s State, blockID types.BlockID, block
 
 	fail.Fail() // XXX
 
-	// save the state and the validators
-	SaveState(blockExec.db, s, appHash)
+	// update the app hash and save the state
+	s.AppHash = appHash
+	SaveState(blockExec.db, s)
 
 	return s, nil
 }
@@ -110,7 +115,7 @@ func (blockExec *BlockExecutor) Commit(block *types.Block) ([]byte, error) {
 		blockExec.logger.Debug("Commit.Log: " + res.Log)
 	}
 
-	blockExec.logger.Info("Committed state", "height", block.Height, "txs", block.NumTxs, "hash", res.Data)
+	blockExec.logger.Info("Committed state", "height", block.Height, "txs", block.NumTxs, "appHash", res.Data)
 
 	// Update evpool
 	blockExec.evpool.MarkEvidenceAsCommitted(block.Evidence.Evidence)
@@ -343,16 +348,14 @@ func updateState(s State, blockID types.BlockID, header *types.Header,
 }
 
 func fireEvents(txEventPublisher types.TxEventPublisher, block *types.Block, abciResponses *ABCIResponses) {
-	// TODO: Fire events
-	/*
-		tx := types.Tx(req.GetDeliverTx().Tx)
+	for i, tx := range block.Data.Txs {
 		txEventPublisher.PublishEventTx(types.EventDataTx{types.TxResult{
 			Height: block.Height,
-			Index:  uint32(txIndex),
+			Index:  uint32(i),
 			Tx:     tx,
-			Result: *txRes,
+			Result: *(abciResponses.DeliverTx[i]),
 		}})
-	*/
+	}
 }
 
 //----------------------------------------------------------------------------------------------------
diff --git a/state/state.go b/state/state.go
index ed8a20137..7ffa56edc 100644
--- a/state/state.go
+++ b/state/state.go
@@ -91,7 +91,7 @@ func (s State) Bytes() []byte {
 
 // IsEmpty returns true if the State is equal to the empty State.
 func (s State) IsEmpty() bool {
-	return s.LastBlockHeight == 0 // XXX can't compare to Empty
+	return s.Validators == nil // XXX can't compare to Empty
 }
 
 // GetValidators returns the last and current validator sets.
diff --git a/state/state_test.go b/state/state_test.go
index cbd3c8137..7e9ed2cf8 100644
--- a/state/state_test.go
+++ b/state/state_test.go
@@ -57,7 +57,7 @@ func TestStateSaveLoad(t *testing.T) {
 	assert := assert.New(t)
 
 	state.LastBlockHeight++
-	SaveState(stateDB, state, state.AppHash)
+	SaveState(stateDB, state)
 
 	loadedState := LoadState(stateDB)
 	assert.True(state.Equals(loadedState),
@@ -261,7 +261,7 @@ func TestManyValidatorChangesSaveLoad(t *testing.T) {
 	const valSetSize = 7
 	tearDown, stateDB, state := setupTestCase(t)
 	state.Validators = genValSet(valSetSize)
-	SaveState(stateDB, state, state.AppHash)
+	SaveState(stateDB, state)
 	defer tearDown(t)
 
 	const height = 1
@@ -425,7 +425,7 @@ func TestLessThanOneThirdOfVotingPowerPerBlockEnforced(t *testing.T) {
 	for i, tc := range testCases {
 		tearDown, stateDB, state := setupTestCase(t)
 		state.Validators = genValSet(tc.initialValSetSize)
-		SaveState(stateDB, state, state.AppHash)
+		SaveState(stateDB, state)
 		height := state.LastBlockHeight + 1
 		block := makeBlock(state, height)
 		abciResponses := &ABCIResponses{