BLOCKCHAIN SCALING APPROACHES: NEAR SHARDING VS. ETHEREUM LAYER 2S
Layer-2s (L2s) have gained significant traction as viable scaling solutions for their Layer-1 (L1) counterparts over recent years, most notably since Ethereum made the strategic decision to scale via a rollup-centric roadmap. Essentially, an L2 protocol is engineered atop an existing blockchain to bolster its scalability, throughput, and privacy whilst simultaneously reducing the congestion and cost typically associated with operating on the L1 blockchain. Yet, strikingly, NEAR made the tactical decision to scale via a markedly different method, namely sharding. We shed light on the technology underlying NEAR, while exploring the reason it denounces the idea of scaling via Layer-2s.
Blockchain Scaling via Ethereum Layer 2s
To comprehend the different scaling approaches fully, we must first delve into the intricacies of how L2s operate. Generally, L2s function by executing state transitions ‘off-chain’ from the L1 they’re built upon and subsequently committing state roots and transactional data to the foundational L1. Depending on how these state transitions are authenticated, these can materialise as optimistic rollups — which lean heavily on fraud proofs, or alternatively, ZK rollups — utilising zero-knowledge proofs to verify the legitimacy of the L2 state transition.
The philosophy behind scaling through rollups is grounded in the belief that a rollup can surpass the underlying L1 in terms of throughput owing to decreased consensus overhead. This theory posits that multiple rollups could operate autonomously, functioning as their own chains and processing a variety of transitions. The foundational L1 offers a bedrock of security for these rollups, acting as a settlement layer, whilst in return, the rollups provide enhanced scalability. This, in effect, delegates the formidable challenge of scalability to an external protocol, thus simplifying the design of the Layer 1 protocol. Ethereum, for instance, has garnered considerable attention for its strategy to scale through rollups such as Arbitrum, Optimism, ZkSync, and Polygon zkEVM.
However, the burning question remains — does this seemingly promising design philosophy translate into practical success? While it may be too early to deliver a final verdict, there are already crucial lessons to be gleaned. Firstly, composability amongst L2s has proven problematic. Although each rollup individually has a greater throughput than Ethereum, rollups fall short when it comes to native interoperability that allows contracts from differing rollups to engage with each other. Each can only engage with Ethereum’s L1. This facet of composability is of paramount importance for financial applications and arguably underpins the success of the Ethereum L1.
Secondly, while theoretically, rollups should collectively work to scale Ethereum, the reality paints a different picture. The overall scaling achieved by rollups collectively has been relatively lacklustre, barely surpassing what a singular rollup can offer. This is primarily attributed to the fact that popular Ethereum dapps operate on nearly all rollups, resulting in similar transactions being ‘duplicated’ across different rollups. Consequently, transactions utilising DeFi applications like Uniswap on varying rollups are in direct competition for call data space on Ethereum for data availability.
Blockchain Scaling on NEAR Protocol
In contrast, NEAR tackles scalability through sharding, a method that partitions the network into distinct segments built directly into the protocol itself, all while retaining the security assurances of the L1 blockchain.
NEAR’s architecture is, in a sense, analogous to Ethereum operating with rollups, where each shard mimics an optimistic rollup. The crucial distinction lies in the fact that as sharding is integrated into the protocol, applications on one shard can engage natively with applications on another shard. The homogenous sharding model also ensures that two applications interact in the same manner regardless of their deployment on the same shard or not. Consequently, developers are relieved of the burden of deciding which shard to deploy their applications on. Moreover, they can rest assured knowing that their application can seamlessly interact with any other application deployed on NEAR, obviating the need for third-party bridges.
While the benefit of composability offered by NEAR’s sharding approach is noteworthy, it is the speed of finality on NEAR that instils confidence in users, who can rest assured that their transactions will be finalised within two to three seconds. Conversely, in the rollup universe, transaction finality leaves much to be desired. Optimistic rollups are notorious for their extended exit time (typically 7 days) and ZK rollups are hindered by proof generation, which currently takes up to 10 minutes. Moreover, in NEAR’s sharding model, the throughput scales almost linearly with the number of shards. Thanks to the native composability, developers and users truly reap the benefits of scalability, given that a singular application is only deployed once on one shard. This contrasts sharply with the current state of rollups where popular applications must be deployed on numerous rollups, which dilutes the level of true parallelism in transaction processing.
To Conclude
At their core, the divergent choices regarding scaling approaches mirror different design philosophies underpinning each base protocol. Ethereum prioritises resilience and robustness, minimising the complexity of the L1 protocol design. NEAR, conversely, favours a simplified experience for developers and users, willingly taking on additional protocol complexity ‘under the hood’ to ensure a superior UX.
It’s crucial to note that NEAR isn’t merely an L1; rather, it functions as a blockchain operating system (BOS), providing a common layer for browsing and discovering open web experiences. Despite the protocol design differences, NEAR, as the BOS, empowers developers and users from various blockchains, including Ethereum Layer 2s, to construct and utilise applications across a multitude of blockchain ecosystems.
Original source provided by NEAR Foundation.
Edited by @achildhoodhero
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