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Scalability Trilemma: Choosing between Different Blockchain Solutions

Quick Takes:

  • Layer 1 solutions can improve blockchain scalability but are usually difficult to be implemented fully.
  • Layer 2 solutions can facilitate scalability yet stand a higher chance of sacrificing the security of the underlying blockchain.
  • The best solution for a Scalability Trilemma currently can be chosen based on personal needs.

What is the Scalability Trilemma?

Scalability Trilemma, or Blockchain Trilemma, is a term first brought up by Vitalik Buterin to illustrate a widely held belief that among the three benefits a decentralized network can provide — decentralization, security, and scalability, only two of them can be achieved at the same time.

Decentralization

Decentralization is the core spirit of blockchain, which means the removal of centralized authorities or intermediaries and the distribution of data into the hands of vast users since no single entity has full control over the network.

The level of decentralization is determined by the number of nodes that act as ledgers to record all transactions on a blockchain. The more separate nodes there are, the more decentralized a network will be.

However, the optimized state of decentralization can lead to a much lower speed, as more miners are involved in supporting the network on a consensus algorithm, which requires an increasing amount of resources and thus reduces the overall network throughput and ultimately hinders the mass adoption of a blockchain.

Security

Simply put, security is the ability of a blockchain network to resist external attacks like frauds and threats so that its public ledgers are kept immutable.

The best thing about ensuring the security of a blockchain is that the network would be strong enough to withstand attacks and thus become ideal for more complex application scenarios, such as MMO, financial services, and enterprise applications.

Yet, to keep a blockchain network at a higher level of security usually means a restriction on the performance of the blockchain, as the computing power is to be reallocated to meet the needs for this. Network congestion, throughput reduction, and even user loss are all likely consequences.

Scalability

When it comes to scalability, it refers to the capacity of a blockchain network to support a growing volume of transactions at a proper speed, which is essential for blockchain to fulfill its revolutionary promise of decentralization.

A highly scalable blockchain can ensure the smooth running of applications while supporting a high volume of transactions without compensating speed and is less likely to crash in the face of user demand that goes beyond expectation, which is essential especially for large-scale blockchain games and complex dApps.

But still, high scalability usually goes side by side with security issues since it tends to be increasingly difficult and expensive to take effective security measures as the blockchain network keeps expanding.

The structure of the blockchain architecture makes it a challenging task for developers to come up with a solution for meeting up the three benefits without sacrificing any one of them, which is a task that must be accomplished before the mass adoption of the blockchain technology truly comes.

In Solving the Scalability Trilemma

To find an effective balance between network security, decentralization, and scalability and truly solve the Scalability Trilemma, there have been numerous attempts made across the industry, with Layer 1 solution and Layer 2 solution being the two major directions.

Layer 1 Solution

Based on a Layer 1 network, namely a blockchain like Bitcoin or Ethereum, a Layer 1 solution directly optimizes the blockchain protocol itself to boost transaction speed and capacity for scalability enhancement.

Common approaches to improve the scalability of Layer 1 blockchains are sharding and new consensus mechanisms. Sharding divides transactions into smaller “shards” that can be processed in parallel at the same time and allows each node to hold only a portion of self-consistent data split from the whole blockchain data to boost efficiency.

Ethereum 2.0 results from a consensus mechanism upgrade from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Rather than requiring nodes to conduct cryptographic algorithms using much computer power, PoS decides the status of a node based on its stake in the blockchain, which is set to increase the network’s capacity while enhancing both decentralization and security.

However, scaling solutions on large established Layer 1 networks require community consensus and sufficient time to be fully deployed and are certainly not free of risks, hence the difficulty of implementation.

Layer 2 Solution

Layer 2, just as its name implies, refers to a network or technology running on top of a Layer 1 blockchain for improvements in efficiency and scalability. Layer 2 solutions, like Plasma on Ethereum or Lightning Network for Bitcoin, are built to speed up transactions and enhance scalability through sharing the transnational load while retaining the security of the underlying layer.

Sidechains are independent blockchains running along the Layer 1 network and utilized to make transactions faster and cheaper. With a separate set of consensus mechanisms, security breaches on a sidechain network will not affect the main chain or other sidechains.

Nested Blockchains are decentralized networks involving the main chain and multiple interconnected secondary chains that run atop the Layer 1 blockchain. In a parent-child relationship, the main chain distributes work to the secondary chains, which process the work and return the results to the main chain, thus reducing the processing workload on the main chain and improving scalability.

State Channels offer a two-way communication environment between a blockchain and other off-chain transaction parties. Via a multi-signature or smart contract, a part of the underlying blockchain is sealed off, and transactions can then be executed. The final results of the transactions will be sent to the blockchain once all transactions are complete.

Although the Layer 2 solution brings huge improvement in scalability, there comes a chance to sacrifice the security of the underlying blockchain. By taking transactions off Layer 1, users become dependent on Layer 2 teams and networks for security instead of relying on the resilience and capacity of the main blockchains like Ethereum and Bitcoin.

Rangers Protocol’s Approach

As a Web3 Engine infrastructure aiming to minimize development difficulty and maximize the user experience of blockchain-based applications, Rangers Protocol has also been working on breaking the Scalability Trilemma through its own parallel and expandable solutions.

Rangers Mainnet is a high-performance blockchain that supports complex applications. Integrated with an efficient VRF+BLS consensus mechanism. This highly scalable blockchain can support high-frequency trading through real-time confirmation and reduce the possibility of network congestion and usage costs, providing a consensus mechanism for decentralization and security just like an engine of a car.

Meanwhile, Rangers Protocol is working on solving the issue of scalability from a structural perspective based on the concept of the “parent and child chain.” Its upcoming sub-chain plan can effectively help prevent complex apps from affecting the speed of the main blockchain, further enhancing scalability while leveraging the security of Rangers Mainnet.

In addition, Rangers Protocol offers Rangers Connector, a cross-chain solution undergoing blockchain integration, which can enhance the security and decentralization of the cross-chain process. Its Rangers Bridge can already support FT and NFT cross-chain, with data and information cross-chain coming up next in line. Based on distributed signatures, Rangers Connector can remove the cross-chain communication barriers and lower the operation difficulty for developers and mass users.

In Pursuit of the Best Solution

As for now, there still isn’t anyone who has come up with an ultimate solution for the Scalability Trilemma, before which it would be more reasonable for blockchain users or practitioners to choose a solution based on their own specific needs.

For complex applications like large-scale gaming, scalability would be essential, and thus developers or entrepreneurs could prioritize deploying or developing on blockchains with great scalability and speed. For investors and traders, security could be the main concern, and solutions with ZKproof or MPC could be preferred. And for DAO enthusiasts, decentralization may be the main point to focus on.

The above-mentioned solutions all have their pros and cons and are certainly not mutually exclusive. An ultimate scaling solution can come out of new technology as much as a perfect combination of existing solutions, and exploration for such a solution will never cease until there is one.

About Rangers Protocol

Rangers Protocol is the backbone of a Web3 engine for creating immersive Web3 applications. It minimizes the development difficulty for Web3 developers and maximizes the user experience of its Web3 applications. Rangers Protocol provides comprehensive infrastructures for efficient complex-app development, successful cross-chain and mass distribution, diverse in-app NFT and DeFi features, and more. Through its full EVM compatibility, strategic industry partnerships, and curated all-in-one IDE, Rangers Protocol supports AAA and indie developers to succeed in the Web3 world.

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Rangers Protocol

Rangers Protocol

Web3 Engine infrastructure to minimize the development difficulty for Web3 developers and maximize the user experience of its Web3 applications