Big Days of Blockchain Scalability
After many major events and a lot of drama in 2017 about blockchain scalability, it seems 2018 is carrying a lot of hope. In my opinion, 2018 would be remembered as the year when a number of major scalability solutions were first introduced. This article is exploring some of the scalability solutions that we have explored in zk Capital and how they will hopefully alleviate the pains that the community has suffered in the past.
In general, we can divide scalability solutions into three major categories:
- On-chain solutions to improve scalability of current blockchains
- Off-chain scaling solutions or second-layer solution
- New protocols that are build with scalability in mind
The major example of the first category is the in-progress development to scale Ethereum blockchain through Plasma and sharding. This work is becoming critically important specially as the Ethereum Blockchain has grown to over 1TB. Sharding aims to divide the main Ethereum blockchain into multiple parallel blockchains called shards. Different Ethereum nodes can validate transactions on different shards which will significantly improve Ethereum throughput. In addition, sharding also lowers computational/storage requirements for nodes while maintaining decentralization. The work on sharding is being led by Prysmatic labs who have received grants from the Ethereum foundation, District0x and Aragon to build the first implementation of sharding for the go-ethereum client.
Off-chain solutions have been achieving amazing progress too. Lightning network was released on both Bitcoin and Litecoin mainnets and the numbers of nodes participating in the network is continuously increasing. Lightning has grown to thousands of nodes withing a few months of its launch. Another off-chain scaling solution that we are excited about is Liquidity Network. Liquidity is similar to Lightning but it simplifies the off-chain routing problem further by using the concept of trustless and auditable payment hubs. The alpha release of Liquidity Network was released on Ethereum testnet and has been active since March of 2018. The main network launch is scheduled for Q2 of 2018 and it seems many prominent figures in the Ethereum community is excited about the project.
In addition to the important developments in both the on-chain and off-chain scaling of the existing blockchains, many new protocols are being introduced with the goal to achieve superior scalability. Each of these projects has a different approach to handle the problem. For example, Zilliqa is building a protocol that has sharding implemented from the beginning. They are also trying to improve on other areas like the mining energy consumption by using a hybrid consensus mechanism that mixes Proof of work and practical Byzantine fault tolerance.
Other protocols improve throughput by introducing new consensus mechanisms. For example, Dfinity introduces an innovative consensus mechanism that is capable of achieving sub-second block times. Dfinity’s Notarization mechanism allows a random committee of network users to achieve fast consensus about proposed blocks allowing for fast block confirmation and finality. Recently, an average block time of 0.9 seconds was achieved on the test network.
Another innovative idea for fast consensus is being developed by the Thundertoken team. They introduce a hybrid consensus mechanism which combines the benefits of the long studied distributed system consensus and the Nakamoto consensus mechanisms. The consensus mechanism uses a fast-track consensus through committee voting managed by a randomly selected leader. The fast track will allow fast block finality and larger transaction throughput. If consensus cannot be achieved through committee voting due to a dishonest leader, the consensus mechanism falls to the classic Nakamoto consensus to keep the network safe. A great explanation of this concept was presented by Prof. Elaine Shi in her Stanford Bpase’18 talk:
In comparison to innovating new consensus mechanisms, other researchers handle the scalability problem through a different approach. Scalability can be always improved by increasing the block size as was done in the Bitcoin Cash hard fork in August of 2017. The downside is that larger blocks would take longer times to be propagated between nodes which may lead to decreased decentralization. To solve this problem, a project like BloXroute is proposing an innovate network solution called block distribution network (BDN). The BDN acts as transport layer that can be integrated into any blockchain protocol and improve block propagation times to allow for thousands of transactions per second. The BDN will probably be fundamental to major blockchains like Bitcoin Cash that opt to solve scalability issues by increasing the block size.
Each of the mentioned projects has a significant amount of innovation that requires articles to cover. This will be done in the future. However, in this article, I tried to give a high-level overview of these projects and how they would greatly improve scalability issues. This is really needed to avoid times when the on-chain transaction fees skyrocket to tens of dollars which, without doubt, slows down mainstream adoption.
Disclaimer: Information in this article is for educational purposes only and cannot be taken as investment advice.
