diff --git a/blockchain/block.go b/blockchain/block.go
index 696630db8..21d1a1a95 100644
--- a/blockchain/block.go
+++ b/blockchain/block.go
@@ -28,6 +28,10 @@ type Block struct {
 	Signature [66]byte // Schnorr collective signature
 }
 
+func (b *Block) IsStateBlock() bool {
+	return bytes.Equal(b.PrevBlockHash[:], (&[32]byte{})[:]) // TODO: think of a better indicator to check
+}
+
 // Serialize serializes the block
 func (b *Block) Serialize() []byte {
 	var result bytes.Buffer
@@ -75,6 +79,10 @@ func (b *Block) Write(db db.Database, key string) error {
 	return db.Put([]byte(key), b.Serialize())
 }
 
+func Delete(db db.Database, key string) error {
+	return db.Delete([]byte(key))
+}
+
 // CalculateBlockHash returns a hash of the block
 func (b *Block) CalculateBlockHash() []byte {
 	var hashes [][]byte
diff --git a/node/node_handler.go b/node/node_handler.go
index e7a3819ff..20f9e47ff 100644
--- a/node/node_handler.go
+++ b/node/node_handler.go
@@ -271,7 +271,7 @@ func (node *Node) BroadcastNewBlock(newBlock *blockchain.Block) {
 
 // This is called by consensus participants to verify the block they are running consensus on
 func (node *Node) VerifyNewBlock(newBlock *blockchain.Block) bool {
-	if bytes.Equal(newBlock.PrevBlockHash[:], (&[32]byte{})[:]) {
+	if newBlock.IsStateBlock() {
 		return node.UtxoPool.VerifyStateBlock(newBlock)
 	} else {
 		return node.UtxoPool.VerifyTransactions(newBlock.Transactions)
@@ -282,22 +282,36 @@ func (node *Node) VerifyNewBlock(newBlock *blockchain.Block) bool {
 // 1. add the new block to blockchain
 // 2. [leader] move cross shard tx and proof to the list where they wait to be sent to the client
 func (node *Node) PostConsensusProcessing(newBlock *blockchain.Block) {
-	node.AddNewBlock(newBlock)
-
-	if node.Consensus.IsLeader {
-		// Move crossTx-in-consensus into the list to be returned to client
-		for _, crossTxAndProof := range node.CrossTxsInConsensus {
-			crossTxAndProof.Proof.BlockHash = newBlock.Hash
-			// TODO: fill in the signature proofs
-		}
-		if len(node.CrossTxsInConsensus) != 0 {
-			node.addCrossTxsToReturn(node.CrossTxsInConsensus)
-			node.CrossTxsInConsensus = []*blockchain.CrossShardTxAndProof{}
+	if newBlock.IsStateBlock() {
+		// Clear out old tx blocks and put state block as genesis
+		if node.db != nil {
+			node.log.Info("Deleting old blocks.")
+			for i := 1; i <= len(node.blockchain.Blocks); i++ {
+				blockchain.Delete(node.db, strconv.Itoa(i))
+			}
 		}
+		node.blockchain.Blocks = []*blockchain.Block{}
+		node.AddNewBlock(newBlock)
+	} else {
+		node.AddNewBlock(newBlock)
+		node.UpdateUtxoAndState(newBlock)
+
+		if node.Consensus.IsLeader {
+			// Move crossTx-in-consensus into the list to be returned to client
+			for _, crossTxAndProof := range node.CrossTxsInConsensus {
+				crossTxAndProof.Proof.BlockHash = newBlock.Hash
+				// TODO: fill in the signature proofs
+			}
+			if len(node.CrossTxsInConsensus) != 0 {
+				node.addCrossTxsToReturn(node.CrossTxsInConsensus)
+				node.CrossTxsInConsensus = []*blockchain.CrossShardTxAndProof{}
+			}
 
-		node.SendBackProofOfAcceptOrReject()
-		node.BroadcastNewBlock(newBlock)
+			node.SendBackProofOfAcceptOrReject()
+			node.BroadcastNewBlock(newBlock)
+		}
 	}
+
 }
 
 func (node *Node) AddNewBlock(newBlock *blockchain.Block) {
@@ -308,6 +322,9 @@ func (node *Node) AddNewBlock(newBlock *blockchain.Block) {
 		node.log.Info("Writing new block into disk.")
 		newBlock.Write(node.db, strconv.Itoa(len(node.blockchain.Blocks)))
 	}
+}
+
+func (node *Node) UpdateUtxoAndState(newBlock *blockchain.Block) {
 	// Update UTXO pool
 	node.UtxoPool.Update(newBlock.Transactions)
 	// Clear transaction-in-Consensus list