Blockchain Fundamentals: Scaling through Interoperability — featuring the Ark Ecosystem


Setting: Lawrence, KS, Mid-November, 5:00 pm

It’s a few hours ’til tip-off for the first Men’s Kansas Basketball game of the season. Like clockwork, thousands of dedicated fans flock into the college town, bumper to bumper, on highways I-70 and K-10. Nobody likes traffic jams, and everyone wishes they had their own personal driving lane.

Blockchain developers and users feel the same way.

There are thousands of new-age web projects in development which plan to utilize the Ethereum blockchain, but the question remains if Ethereum can handle the network traffic of a thousand projects. In this installment of Blockchain Fundamentals, we explore the solutions in development to scale the public blockchain ecosystem

As mentioned in Part 1 of this series, improving a public blockchain’s frequency (block time) and capacity (TPS = block time x block size) is not the complete solution to achieving scalability for mass adoption. Before jumping into particular concepts, let’s first briefly expand on what is Ethereum and the scalability problem it faces.

The creation of Ethereum (2014) was a massive landmark of innovation for the cloud computing and blockchain space. The creation of Bitcoin (2009) brought the ability for parties to safely transact value without a trusted third party. Ethereum takes this same concept, and then applies it to traditional computer logic (If, then, else, execute command). Ethereum’s network is partially composed of a decentralized virtual machine that serves as a platform for developers to build decentralized applications, also known as dapps.

Unfortunately, Ethereum’s network performance is seriously constrained due to it Proof of Work consensus mechanism. It’s capacity cannot scale for mass adoption by everyday users and enterprises in its current form. To explain why, we will examine what happened when the first popular Ethereum dapp, CryptoKitties, launched on the network in late 2017.

CryptoKitties is an Ethereum dapp that lets users to breed digitally unique cats that can be traded and sold, like Pokemon cards. The game was an instant hit with Ethereum users. Transactions related to breeding/buying/selling digital cats accumulated for 25% of total network traffic as the dapp user count grew to 1.5 million by the end of March 2018.

Historical data pulled from www.blockchain.com/charts/mempool

This caused serious network congestion. When a network is operating at full capacity, unconfirmed transactions are pooled together in a “mem-pool”. A mem-pool is best described as a waiting room, and the size of the fee the user attaches to the transaction reflects their spot in line to get confirmed by miners. During the dapp’s peak usage, the mem-pool grew to 33,000 transactions while transactions fees soared as users competed to get their transactions confirmed. This real world event highlighted a serious problem with Ethereum’s current design where transactions, regardless of the dapp or type, are all given the same preferential treatment by miners.

Many projects are currently in development across the globe to solve this issue, whether it be altering the current design of Ethereum or launching a fully separate project and network. The developers of the Ark Ecosystem crafted a solution called “Smartbridge” to circumnavigate this scaling problem by giving each dapp the ability to have its own blockchain network that is interoperable with other networks. This concept of giving developers the ability to build their own blockchain for their specific dapp requires the introduction of some new terminology.

These terms are mainchain, sidechain, interoperability, and ecosystem.

Key Definitions

Mainchain: The blockchain that serves as the primary avenue for cross chain transactions between different sidechains.

Sidechain: A separate and custom tailored blockchain that runs parallel to the mainchain. It processes its own transactions natively, but remains connected to the mainchain in order to be interoperable with other sidechains.

  • Also referred to as: “bridgechain” (Ark), “childchain” (Ardor), and many more

Interoperability: The ability for one blockchain to communicate with another blockchain, yet remain independent.

Ecosystem: A network of interoperable sidechains that can utilize each other’s functions.

To efficiently comprehend the following concepts, let’s first visually analyze how network traffic flows on Ethereum’s blockchain before explaining the design and utility of the Ark Ecosystem’s Smartbridge technology.

Figure 1: Ethereum network traffic flow

Visual Explained: Paying homage to the transportation analogy featured in the Part 1 of this series, this is a bird’s eye view of the Ethereum blockchain.

  • Each cart = block of transactions
  • Transaction color = type of transaction

Every transaction, regardless of it’s type, is utilizing the Ethereum blockchain. This design is the cause for the network congestion issues brought from the Cryptokitties dapp transactions.

Visual Explanation: Utilizing a bird’s eye view again, it’s easy to visualize how capacity can be increased utilizing sidechains that are interoperable with one another. Each dapp has been given its own blockchain to process transactions, significantly reducing the mainchain’s traffic. Utilizing Smartbridges, blockchains can utilize the features of one another, and this gives birth to a blockchain ecosystem — Hence the name “Ark Ecosystem”.

“But wait, I’m confused. Where are the smartbridges and mainchain?”
Interoperable Ecosystem

Visual Explanation: It’s better to visualize a blockchain ecosystem as sidechain layers stacked on top of one another. Between each sidechain layer resides the mainchain. Notice that the mainchain looks just like the current Ethereum blockchain in figure 1, filled with transactions from all different kinds of dapps/networks. Utilizing Smartbridges, each sidechain is interoperable with one another, and therefore benefits from the features of the other chains.

In order for a sidechain to utilize a Smartbridge, the sidechain runs two sets of nodes:

  1. Nodes for native transactions on their network
  2. Ark ACES nodes for transacting with between other sidechains
Graphic by biz_network

To learn more about ACES Nodes and the ACES Marketplace, click here.

To learn how trustless token swapping will be implemented, click here.

This completes Part 2 of Blockchain Fundamentals: featuring the Ark Ecosystem. There are still many more aspects of public blockchains that need to be covered such as consensus mechanisms, governance, and security. Those topics are better saved for another time. Part 3 is coming soon.