diff --git a/pkg/vm/vm.go b/pkg/vm/vm.go
index 218824e1f..94912eda1 100644
--- a/pkg/vm/vm.go
+++ b/pkg/vm/vm.go
@@ -398,9 +398,10 @@ func (v *VM) execute(ctx *Context, op Instruction) {
 		v.estack.PushVal(v.estack.Len())
 
 	case NIP:
-		elem := v.estack.Pop()
-		_ = v.estack.Pop()
-		v.estack.Push(elem)
+		elem := v.estack.RemoveAt(1)
+		if elem == nil {
+			panic("no second element found")
+		}
 
 	case OVER:
 		b := v.estack.Pop()
diff --git a/pkg/vm/vm_test.go b/pkg/vm/vm_test.go
index 4f2b1b231..b85f4bc0c 100644
--- a/pkg/vm/vm_test.go
+++ b/pkg/vm/vm_test.go
@@ -803,6 +803,25 @@ func TestOVERgood(t *testing.T) {
 	assert.Equal(t, 3, vm.estack.Len())
 }
 
+func TestNIPBadNoItem(t *testing.T) {
+	prog := makeProgram(NIP)
+	vm := load(prog)
+	vm.estack.PushVal(1)
+	vm.Run()
+	assert.Equal(t, true, vm.state.HasFlag(faultState))
+}
+
+func TestNIPGood(t *testing.T) {
+	prog := makeProgram(NIP)
+	vm := load(prog)
+	vm.estack.PushVal(1)
+	vm.estack.PushVal(2)
+	vm.Run()
+	assert.Equal(t, false, vm.state.HasFlag(faultState))
+	assert.Equal(t, 1, vm.estack.Len())
+	assert.Equal(t, makeStackItem(2), vm.estack.Pop().value)
+}
+
 func TestDROPBadNoItem(t *testing.T) {
 	prog := makeProgram(DROP)
 	vm := load(prog)