What is Sharding and How Does it Resolve Scalability in Blockchain?
Sharding, as it relates to blockchain, is the technique of separating databases into smaller partitions or “shards” to reduce congestion in the systems and increase network scalability and consistency. Sharding is also used in numerous modern applications as a way to increase transactional speed in decentralized applications like blockchain networks.
With the growing adoption of peer-to-peer blockchain networks, the number of financial transactions has grown exponentially. But to this day, many networks continue to struggle with scalability.
Scalability is the capacity of a blockchain network to deal with a large number of transactions within a limited time.
The blockchain network is a chain of innumerable blocks that store data. As the transaction volume increases, there is a backlog of blocks that are unvalidated, which slows down the transaction process. Sharding distributes the computational and storage workload across the network instead of delegating the entire responsibility into a single node or block.
What is Sharding and How Does it Work?
Sharding is the process of splitting the blockchain network into smaller pieces or shards. All network data is distributed and stored among different shards. Each shard has distinct characteristics and different purposes. As the network and data are fragmented, the underlying protocols function more effectively and declutter the blockchain network so that more blocks can be added. Though the network is partitioned, each shard is interconnected and shares data with other shards. Each node contributes to the decentralization of the network.
Types of Sharding
- Horizontal sharding — Databases can be partitioned or sharded horizontally into rows. Each row or shard has different characteristics and roles. For example, one shard is responsible for storing the transaction history, while another may look after network governance. Horizontal partitioning helps break down large databases into smaller partitions.
- Shard sharding — Here, each shard is interconnected with other shards, which allows them to view and access all ledger transactions and data.
Ethereum Shard Merging
On September 15, 2022, the Merge was executed between the Ethereum Mainnet and the Beacon Chain network facilitating a transition from the Proof-of-Work (PoW) consensus mechanism to the Proof-of-Stake (PoS) consensus. The step to merge the Ethereum Mainnet to the upgraded version of Ethereum 2.0 was also called “the docking.”
Launched on December 1, 2020, the Beacon Chain is the original proof-of-stake network that ran parallel to Ethereum Mainnet. The main idea is to integrate with Ethereum’s original network and allow its transition to proof-of-stake consensus. The Beacon Chain processes the transactions from the original Ethereum network, creating new blocks that will be validated. Each new validator will earn ETH through the process, thus securing the network.
The Ethereum Mainnet was secured by the PoW consensus prior to the Merge. The Beacon Chain ran parallel to the Ethereum genesis network as a separate blockchain. Following the Merge, the two networks integrated and proof-of-stake permanently replaced the original proof-of-work consensus mechanism.
Under the PoS system, nodes do not bear the burden of the entire activities of the network. Each node will be responsible for maintaining its own data that is related to its shard. All information can be shared with other shards of the network.
Ethereum’s workload will be distributed among 64 different shard chains. Stakers will be chosen randomly to validate the shard chains, and this random selection would make it extremely difficult for hackers to attack the network. As a result of the Merge, Ethereum 2.0 will be more scalable, faster, and will have improved data capacity.
Advantages of Sharding
One of the biggest obstacles that blockchain networks face is the scalability issue — the limitation on the speed of transactions. For example, VISA can process more than 24,000 TPS (transactions per second) compared to Ethereum 1.0, which could process only 15 transactions in a second. With the help of sharding, Ethereum 2.0 can process over 100,000 transactions/second. Sharding will drastically improve the performance of blockchain networks.
Ethereum’s new PoS consensus protocol also distributes the burden of operations among different shards instead of one node, unlike PoW. Sharding allows multiple parallel transactions at the same time which will invite more users into the system and support the decentralization of the network.
Disadvantages of Sharding
Sharding is a complex procedure and cannot be implemented on a proof-of-work consensus protocol. Another major drawback is communication between multiple shards. There can be miscommunication in managing and organizing proposed validators and making them follow the consensus rules properly. The same problem may apply to delegating operations, distribution of rewards, and penalties.
There is also a possibility of the “1% Shard Attack (single-shard takeover attack)” which allows the attacker to take complete control over a single shard. In a PoW network, a participant can execute a “51% Attack” if he has a majority or more than 50% of the hash power of the whole network. This involves a lot of intrinsic costs and is not feasible. A “1% Attack” requires the attacker to control only a single shard or 1% of the hash power, or 1% of the network. It is easy to achieve compared to 51% attack.
Another issue is that if a single shard fails to operate, it can affect the other shards and slow down operations in the entire system.
Bottom line
Scalability has plagued the blockchain industry for ages and sharding offers a potent solution to this problem. While sharding is not devoid of certain drawbacks, it does scale up data processing without compromising network security and functionality.
FAQs
What is sharding in crypto?
Sharding as it relates to blockchain is the technique of separating databases into smaller partitions or “shards” to reduce congestion in the systems and increase network scalability and consistency.
Why is sharding used?
Many blockchain networks like Ethereum and Bitcoin use the proof-of-work consensus mechanism. The protocol consumes a lot of computational power, and the addition of too many nodes slows down the system. Sharding operates on a PoS consensus protocol, which is energy-efficient and distributes the operations into parts called shards. These shards are validated by stakeholders of the network leveraging the overall operational speed and network security.
Does Ethereum have sharding?
Yes, Ethereum 2.0 has integrated with the Beacon Chain network and has replaced proof-of-work consensus with proof-of-stake to implement sharding.
What is Ethereum sharding?
Ethereum sharding is the multi-phase approach to split up the databases of the entire network into smaller subsets or shard chains to reduce network latency, lower transaction fees, improve data storage, and confirm faster transactions.
What blockchains use sharding?
Blockchain networks like Ethereum, Polkadot, Zilliqa, and NEAR network use sharding.
Originally published at https://www.cryptohopper.com.
