Sharding, Raiden, Plasma: The Scaling Solutions that Will Unchain Ethereum

And how imbrex is positioned to grow with the blockchain of tomorrow

Cryptocurrency heavyweights such as Bitcoin and Ethereum are beginning to garner the attention of mainstream media in thanks largely to their monstrous rise in value over the past year. This coverage has piqued the interest of people all over the world who are eager learn more about the underlying technology and how to get involved. However, it also raises concerns of scalability — growing the capacity of blockchain networks to handle the massive influx of traffic that comes alongside mainstream adoption — one of the biggest challenges facing blockchain technology today.

In our previous blog post, we discussed how the current throughputs of Bitcoin and Ethereum are limited, which results in a backlog of unconfirmed transactions when their networks are at full capacity. This issue was laid front and center just this week, and provides a perfect example of the challenges facing the extreme growth of blockchain technology…

CRYPTOKITTIES

CryptoKitties, a recently launched dApp upon which users trade virtual kittens, went viral and tested the network’s capacity, providing essential scaling data and a valuable case study for Ethereum’s viability in asset management, and for the Ethereum blockchain’s current transactional capabilities. In the span of four days,CryptoKitties went from accounting for 3% of all Ethereum transactions to 11.77%. This resulted in transaction backlogs, network delays and higher gas fees.

Real estate, a 217 trillion dollar global asset class, will be among the largest industries to benefit from the blockchain. However, blockchain technology will struggle to reach its full potential if it fails to overcome this obstacle and facilitate transactions on a global scale. In order for imbrex and other dApps to operate efficiently, these hurdles must be addressed.

Fortunately, there are a number of teams working on a variety of solutions to this problem. We will be taking a closer look at some of the promising scaling solutions for Ethereum: Sharding, Raiden, and Plasma.

Sharding

In Ethereum’s current state, nodes compete independently to validate a single transaction in exchange for a monetary reward. Once a node successfully validates a transaction, other nodes verify this information is correct, update the blockchain, and compete to validate the next transaction. The nodes that process these transactions must keep a record of all information stored on the blockchain; this includes every single account balance, transaction, and smart contract.

As Ethereum begins to flourish, this process will become increasingly inefficient. Sharding will allow nodes and transactions to be divided into smaller groups, meaning more transactions can be validated at once, and nodes only need to store certain segments of the blockchain. Before Sharding can be implemented, Ethereum protocol must be upgraded to Casper, which is currently still in development.

Raiden

Unlike Sharding, Raiden proposes to scale the Ethereum network off-chain using state channel technology. Raiden will make microtransactions more feasible for Internet of Things and Machine-to-Machine applications, which is a huge and growing market. Explained simply, off-chain transactions allow a collection of nodes to establish payment channels between each other to facilitate transactions, without directly transacting with the Ethereum blockchain and clogging up precious capacity.

Off-chain transactions are faster and cheaper than on-chain transactions because they can be recorded immediately, and fees are only paid for forwarding transactions between nodes; there is no need to wait for block conformations and pay a competitive fee to incentivize miners to include the transaction in the next block. Although these nodes can only communicate with their direct neighbor, transactions can be forwarded from neighbor to neighbor to reach non-neighboring nodes. The only caveat is that each node must hold a balance greater than or equal to the amount in the transaction.

Recently, a simplified version of this scaling solution called µRaiden was activated on the Ethereum Mainnet.

Plasma

Another scaling solution is Plasma, which uses a series of smart contracts to create hierarchical trees of sidechains. It can be thought of as a child blockchain that lives within a parent blockchain and relays information back to root chain (Ethereum) periodically.

Because each child blockchain is created through a smart contract, it may be governed by its own set of rules and constraints. Transactions can even be reversed if a participant within the child blockchain is proven to have acted maliciously.

Theoretically, there are no limits on how many children blockchain that can be made; therefore, Plasma could facilitate nearly infinite scaling. This all happens off-chain which means, like Raiden, Plasma gets the benefits of faster and cheaper transactions.

In Closing

Blockchain technology has the potential to impact countless industries by reinventing how we create value and transact with one another. Billions of transactions happen every day, many of which are making their way to the blockchain. If blockchain technology does not find a way to handle all of these transactions, growth and adoption will be stifled.

Ethereum is making steady progress towards scaling solutions on-chain with Sharding and off-chain with Raiden and Plasma. Although there are numerous propositions, it is very possible for them to complement each other. When these solutions are implemented, we may reach unprecedented levels of transactions.

In developing the imbrex platform, we have also paid close attention to optimizing imbrex’s transactional relationship with the Ethereum blockchain. That’s why we’re implementing innovations like a dual-option membership model to more effectively serve our users and the network, have designed our smart contracts to maximize network efficiency, and are following a roadmap that releases, perfects, and then grows the imbrex platform in concert with the implementation of scaling solutions for the Ethereum network.

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