Blockchain Scalability
Scaling Blockchain: A quick walk-through
Definition:
Scalability is the key limitation of the blockchain technology [1]; indeed, the number of transactions that can be processed per second is small and insufficient (e.g., up to 7 for Bitcoin and 15 for Ethereum). This is unacceptable for most traditional centralized payment systems that require 1000s of transactions per second (tx/s); as a comparison, Visa handles an average of 1700 tx/s.
Scalability Trilemma
Generally, scalability is not well-defined in the literature. However, the scalability trilemma is well-known in blockchain; it was first described by Vitalik Buterin, the co-founder of Ethereum. Vitalik states that tradeoffs are inevitable between three important properties: decentralization, scalability, and security.
Taxonomy of blockchain scalability solutions
blockchain scalability is emerging as a challenging issue. This article outlines the existing solutions to blockchain scalability, which can be classified into two categories: first layer and second layer solutions. First layer solutions propose modifications to the blockchain (i.e., changing the blockchain structure, such as block size) while second layer solutions propose mechanisms that are implemented outside of the blockchain.
First Layer Solutions
First layer solutions (aka, on-chain solutions) propose modifications to the blockchain protocols (typically requiring a hard fork of the blockchain), such as sharding, block size increase, and Directed Acyclic Graph (DAG).
Sharding
The promising and the leading solution currently discussed in the blockchain literature makes use of the concept of sharding[1]. Sharding divides or splits the network into subsets, called shards or committees; each shard will be working on a different set of transactions in parallel, rather than the entire network processing the same transactions. This allows the network to scale with the numbers of shards, allowing the throughput and storage to achieve high efficiency, yet potentially compromising the security[2][3].
Block Size Increase
The block size increase (aka, big block) is a method that increases the maximum block size[4]. In blockchain networks, the blocks are created periodically; each block contains a list of transactions. The number of transactions is limited by the block size; thus, if the block size increases, the number of transactions that can be included in a block will increase leading to an increase in the throughput. However, a larger block size leads to higher block transmission delays; this may lead to unacceptable propagation delays of blocks[1].
Directed Acyclic Graph
DAG is another blockchain structure that differs from traditional blockchains. It is a network of individual transactions linked to multiple other transactions. While blockchain is a linked list of blocks, DAG is a tree, branching out from one transaction to another, and so on [1].
Alternative to Proof-of-Work
The Proof-of-Work (PoW)consensus is widely criticized for its high energy consumption. For instance, a single Bitcoin transaction consumes about 729 KWh of electricity, which can power 24 U.S. households for a day[1]. There are numerous alternatives consensus protocols to Proof-of-Work including the Proof-of-Stake (PoS) consensus, the Delegated Proof-of-Stake (DPoS) consensus, and the Stellar Consensus Protocol (SCP)[1].
Second Layer Solutions
Second layer solutions (aka, off-chain solutions), propose mechanisms that are implemented outside of the blockchain. They process certain transactions (e.g., micro-payment transactions) outside of the blockchain, and only record important transactions (e.g., final balances) on the blockchain. Second layer scalability solutions can be classified into two classes: sidechains and payment channels[1].
Sidechains
A sidechain is a separate blockchain. However, it is not a standalone blockchain, as it is pegged in some way to the main chain. The main chain and the sidechain are interoperable; indeed, assets can move freely from the main chain to sidechain and vice versa. There are numerous sidechains including Plasma[5] and RootStook[6].
Payment channels
Payment channels allow two participants to send a nearly-unlimited number of payments off-chain. There are numerous payment channels including Lightning Network [7] and Raiden Network[8].
The table below shows a simple comparison among different approaches solutions of scalability (advantages and disadvantages) inspired by a survey written by Hafid et al. [1].
References
[1] A. Hafid, A. S. Hafid, and M. Samih, “Scaling Blockchains: A Comprehensive Survey,” in IEEE Access, vol. 8, pp. 125244–125262, 2020, doi: 10.1109/ACCESS.2020.3007251. https://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=9133427
[2] A. Hafid, A. S. Hafid, and M. Samih, “New Mathematical Model to Analyze Security of Sharding-Based Blockchain Protocols,” in IEEE Access, vol. 7, pp. 185447–185457, 2019, doi: 10.1109/ACCESS.2019.2961065.
https://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=8936849
[3] A. Hafid, A. S. Hafid, and M. Samih, “ A Methodology for a Probabilistic Security Analysis of Sharding-Based Blockchain Protocols”, in Advances in Intelligent Systems and Computing, pp. 101–109, doi:10.1007/978–3–030–23813–1_13, ISBN 978–3–030–23812–4
[4] J. Garzik (2015). “Block size increase to 2MB”. Bitcoin Improvement Proposal, Tech. Rep. 102.
[5] https://plasma.io/plasma.pdf
[6] https://www.rsk.co/Whitepapers/RSK-White-Paper-Updated.pdf
[7] https://lightning.network/lightning-network-paper.pdf
[8] “Raiden Network”. raiden.network. Retrieved 2020–09–11.
