The scalability of blockchain networks is becoming increasingly important as their use grows in popularity. Blockchain developers and researchers have been looking towards scaling solutions like sharding, state channels, and Plasma to deal with this problem.
There is a demand for faster and more scalable solutions as the blockchain network grows in terms of the user base and the number of applications running on it.
One of the primary goals of scalability is to allow for more transactions per second without compromising on decentralization or security. Let’s look at these blockchain scaling solutions, explaining in detail how they work, their benefits, and their limitations.
Blockchain Scaling Solution
In general, there are two main types of blockchain scaling solutions which are:
- On-chain scaling
- Off-chain scaling
On-chain scaling
Layer 1 scaling or on-chain scaling refers to any change made directly to a blockchain to improve how fast it works. Their ultimate goal is to enable the blockchain to handle more data and transactions on its main chain.
Thus, regarding Ethereum’s scaling, “on-chain” indicates that the necessary changes are made directly within the blockchain. Under here, we have sharding, which will be explained in detail below.
Off-chain scaling
Off-chain scaling solutions entail offloading some processing and transactions from the primary blockchain. Also known as layer 2 scaling solutions, they are secondary layers that operate on top of Ethereum to enhance its primary layer’s functionality.
The goal is to make the main chain more scalable by lowering its load. This means that some transactions might bypass the main chain altogether, reducing the load on the network. Some examples of layer two blockchain scaling solutions include state channels, Plasma, and sidechains.
Sharding
Regarding blockchain technology, sharding is a method used to increase scalability. It involves breaking up a blockchain network into smaller pieces or “shards.” Shards can independently execute smart contracts and process transactions like individual blockchain nodes.
Sharding aims to divide the blockchain into numerous pieces, relieving individual nodes of the burden of processing every transaction broadcast over the Ethereum network. Imagine each shard to be a subset of a team tasked with completing a specific part of the overall project.
By dividing the workload, each group (shard) may concentrate on its section, resulting in a more efficient and scalable operation. As a result of being processed in parallel by multiple shards, a blockchain network can manage more transactions and data than would otherwise be possible.
When it comes to network security, sharding has several significant drawbacks. Each blockchain shard or division functions independently and can be targeted separately.
The fact that sharding relies on a single point of failure is another disadvantage. Thus, the failure of the entire table of shards would occur from the corruption of a single shard, whether a network, hardware, or system error caused the contamination.
By increasing the network’s speed, sharding helps lower transaction fees by spreading the load. Sharding allows for the processing of transactions in parallel across several shards. Thus, two shards can perform two different sets of transactions simultaneously. This parallelism accelerates the processing of transactions.
State Channels
Channels in blockchain scaling solutions enable off-chain communication while leaving the final settlement to the main chain.
In a blockchain network, state channels function similarly to private chat rooms, allowing users to have a series of short exchanges with someone without making their conversations public. Let’s say you and your friend are interested in a chess game on the blockchain.
Opening a state channel allows you to avoid the potential delays and extra costs associated with recording every activity as a public transaction on the blockchain.
With state channels, most transaction information is kept off the main blockchain, providing more privacy. Furthermore, decentralized applications (DApps) can rely on them because they enable sophisticated smart contracts.
Because there are fewer transactions on the blockchain, miners can finish their work quickly, which is good for scalability. However, state channels come with some limitations. They can’t transfer money off-chain to others not part of the network. In addition, if the transaction structure has more moving parts than simple reoccurring payments, the parties involved must commit a large amount of money.
Plasma
Plasma is an L2 blockchain scaling solution since its security is derived from Ethereum’s underlying layer. Although developers can verify Plasma chain transactions, their security depends on that of the underlying root chain. This blockchain scaling solution comprises Merkle trees and smart contracts in Plasma.
Together, these features allow Plasma to generate an infinite number of “child chains,” essentially subsets of the parent chain. Child chains provide cryptographic proofs to the parent chain to verify the authenticity of transactions.
Think of the main blockchain as the trunk of a tree from which numerous smaller trees (Plasma chains) sprout. Plasma chains can split into multiple branches, each processing transactions and smart contracts.
They’re connected to the main branch, yet they function independently. Furthermore, you can also compare it to building more lanes on a highway at rush hour so that more people can go simultaneously.
If there are problems or disagreements on a Plasma chain, you can easily fix them by returning to the main blockchain. This configuration improves the scalability and efficiency of the blockchain network by allowing for a much higher processing of transactions.
A significant concern about Plasma is the “mass exit” issue. A “mass exit” occurs when many users try to leave a Plasma chain at once. This can cause the main blockchain to become overwhelmed, resulting in slower transaction times and increased transaction fees.
Conclusion
Sharding, State channels, and Plasma are just a few examples of blockchain scaling solutions that offer novel approaches to the scalability challenges that plague blockchain networks. These proposed scaling solutions have the potential to alter the blockchain ecosystem for the better significantly.
These scaling solutions aim to make blockchain networks more robust, fast, and efficient. They offer replacements for several blockchain systems’ inefficient, time-consuming, and resource-intensive processing processes. While each approach has pros and cons, they all help make blockchain technology more flexible and useful for various situations.
