The use of blockchainand Blockchain Scalability Solutions, which is well-known for being a distributed ledger with significant attributes. Such as decentralization, is invulnerable to change, and maximally secure, grew at a fast pace after the creation of Bitcoin in 2009. However, as blockchain networks expand as well as the number of uses they are applied to increases, scalability has become a significant issue. The concept of scalability when used in relation to blockchain. As we saw earlier pertains to the efficiency and capability of an increasingly large number of TPSs that the network can handle. The issue of scalability is best illustrated in many blockchains such as the bitcoin and ethereum. Where a large turn up of transactions leads to a congestion in the network and consequent hike in transaction fees as well as a slow throughput.
The Scalability Trilemma
Vitalik Buterin, the co-founder of Ethereum, coined the term “scalability trilemma” to describe the challenge of balancing three key aspects of blockchain systems: Decentralization refers to the distribution of work or processes in a network; security means protecting the integrity and confidentiality of data. Scalability refers to the ability of the system to increase its storage capacity. As stated by the Choral Trilemma, the condition reveals that the enhancement of one parameter is always caused by the degradation of the others.
For instance, scalability may call for trade-off with decentralization as evidenced by permissioned blockchain systems where TPS is enhanced by the reduction in the number of nodes. The problem that the concept of blockchain scalability solutions tries to solve is the trilemma. Where one can improve one aspect, but it is at the cost of the other two.
Layer 1 Solutions
On chain solutions or Layer 1 solutions include modifications that are done directly on the Blockchain itself in a bid to address the issue of scalability. These solutions can best be described as solutions that aim at improving the throughput of the network.
Sharding
Sharding is a process adopted from Database management where a large database is split into multiple smaller allocates known as “shards.” In the blockchain perspective, it entails the subdividing of the Multi node network into several shards. Each having the capacity to process separate transactional data. This makes it possible for the network to ionse many transactions simultaneously and therefore enhancing the overall throughput of the network. Ethereum 2. 0, the post Ethereum update, plans on sharding as one of its fundamental Scaling solutions.
Proof-of-Stake (PoS) Consensus Mechanism
One more Layer 1 solution is the shift from Proof-of-Work consensus algorithm to the Proof-of-Stake one. PoW, applied in bitcoin and etherum 1. 0, the process of mining is done. Through solving mathematical problems to validate transactions, this is time consuming and power consuming as well. PoS on the other hand allows validators to be chosen in accordance to the number of token they have and which they are willing to risk also in a process known as staking. This method is more efficient and is capable of carrying out more transaction per unit time. Ethereum 2. 0 is also shifting from a PoD to PoS which will help to reduce energy consumption by more than 99% and scalability as the network will be able to handle more TPS.
Block Size Increase
Increasing the block size is a straightforward approach to improving scalability by allowing more transactions to be included in each block. Bitcoin Cash, a fork of Bitcoin, adopted this approach by increasing its block size from 1 MB to 8 MB (and later to 32 MB), which allows for more transactions per block and, consequently, higher throughput.
However, increasing block size can lead to centralization, as it requires more storage and bandwidth, which could exclude smaller nodes from participating in the network.
Block Size Increase
Making the block size larger is the most obvious way in terms of increasing scalability because this way more transactions will be accommodated in a single block. This strategy was adopted by Bitcoin Cash which saw the block size expanded from 1MB to 8MB (and later 32MB) thus proposing more transactions per block and hence a higher through put. Nevertheless, potentially, the increased block size will lead to decentralisation since to accommodate such a block one needs more storage space and bandwidth thus, excluding small nodes from the network.
Layer 2 Solutions
Layer 2 solutions or off chain solutions refer to creating paradigms on the current block chain to deal with complex transactions. Such solutions seek to initiate a transaction within the main blockchain. But process the transaction off the chain with the overall balance only recorded on the chain in the end.
State Channels
The concept of state channels is of Layer 2 scale solutions where participants can execute multiple transactions off-chain. While only the beginning and the end states are registered on the blockchain. This helps in reducing the number of transaction that happens on chain thus enhancing the technology scalability. You can read more about ” The Role of Elastocaloric Materials in Next-Generation Wearable Technology “.The most famous example of the state channel is the Lightning Network for Bitcoin. The LN makes it possible for people to open Lightning channels between them and engage in a zero confirmation transaction. After the channel is closed, there is a residual amount on the Coda ledger which is committed on the Bitcoin blockchain. Microtransactions, and frequent payments, that is those requiring a lot of network traffic to process are better handled through state channels.
Plasma
There is another Layer 2 solution called Plasma which aimed to address the Ethereum scalability issue. It entails creation of other “child” blockchains often referred to as Plasma chains which are distinct from the Ethereum blockchain. Such child chains are able to perform transactions as well as deploy smart contracts. While receiving updates occasionally from the main Ethereum chain.
By offloading a significant portion of the transaction processing to Plasma chains, Ethereum can increase its throughput without compromising security. Plasma is particularly suited for applications that require high transaction volumes. Such as decentralized finance DeFi platforms and gaming.
Rollups
Rollups are a Layer 2 solution in which users bundle several transactions together and submit them. As one transaction to the main blockchain. As a result, it is more efficient in terms of block sizes and overall scalability. Since it does not require as much data to be processed on-chain.
There are two main types of rollups: Two examples of the Rollups – Optimistic Rollups and ZK-Rollups. Optimistic rollups work under the assumption that all transactions are valid and only checks if there is a dispute. ZK-Rollups, on the other hand, employ use zero-knowledge proofs to check the legitimacy of transactions in the off-chain layer. Rollups have become popular in the Ethereum ecosystem, specifically, projects such as Optimism and zkSync use rollup solutions for scaling.
Hybrid Solutions
Apart from Layer 1 and Layer 2 solutions, there are some solutions that take features from both classes to ensure scalability. These solutions are designed to create a balance between on-chain and off-chain computation as both have their benefits.
Sidechains
Sidechains are essentially second-tier blockchains that are linked to the primary blockchain (mainnet) through a two-way peg. This makes it possible to transfer assets to the main chain or the side chain. Which in turn makes it possible to have the off-chain transactions to occur while having the link with the main chain.
Sidechains can be designed to address certain requirements like gaming or supply chain applications. Where there is need for more transactions per second. The main chain is only for final clearings and for security purpose. While the sidechain does most of the actual verifications and clearings.
Interoperability Protocols
The scalability solutions like Polkadot and Cosmos focuses on the ability to link many blockchains into one interconnected network. These protocols help in interconnectivity of different blockchains which make the entire network to be larger.
For instance, Polkadot applies a sharded design decision that utilizing several parachains – parallel blockchains that can transact simultaneously. The main Polkadot relay chain acts as the central chain in the network. While the parachains connect to it to make sure that they are secure and have attained consensus. This makes it possible to have high scalability while at the same time achieve decentralization and security besides.
Challenges and Considerations
Moreover, there are numerous types of scalability solutions that can be potentially beneficial as improvements. Yet all of them have their own problems and pros & cons that have to be taken into account.
- Security: Implementation of off-chain solutions and shard chains bring new threats to the crypto network’s security.
- Complexity: Network complexity: Starting with the fact that implementing scalability solutions. Especially of the hybrid type, may create extra layers of the network.
- Decentralization: Some scalability solutions, for example, increasing the block size or introducing the permissioned side chains, can eventually bring centralization. Because for their active usage, more resources are demanded at the participant.
- Adoption: That is why, for the scaling solutions to be efficient, they must be recognized and embraced by the members of the blockchain community.
Conclusion
Scalability remains as one of the biggest challenges that blockchain technology has to overcome to realise its full potential. The three types of solutions that have been described in this article; Layer 1, Layer 2. And a combination of both have various methods to increase the throughput rate of the blockchain networks. While maintaining decentralization and the security of the network.
It is probable that in the future due to progress in the field of blockchain several of the stated solutions will be used for obtaining the needed level of scalability. Currently, there is a continuous active research and developments on this area, and hence in several years from now. We are bound to come across impressive enhancements on the scalability of blockchains.
