Scalability is a term often used when assessing the capabilities of any blockchain. Cryptocurrency traders, blockchain developers, and anyone interested in this space closely follow how many transactions per second a blockchain can handle.
While greater scalability is important, it’s also essential to make sure that any implementations of technical upgrades still emphasize decentralization, maintain a high level of security, open up possibilities for integration and interoperability, and much more.
In this article, we focus on the research and development that is making Ethereum scalability a reality. We also examine some of the long-term initiatives of the core Ethereum team and projects within the ecosystem. Before we get to those details, let’s examine how Ethereum’s scalability compares to other popular blockchains.
Ethereum Scalability: How Does It Stack Up to Other Blockchains?
The following statistics are from November 1, 2018. These can certainly change in the future as blockchains become more scalable. Additionally, some blockchains could have claimed to reach higher or introduced functionalities on testnet that exceed these stats. However, these numbers are based on what projects and reputable sources have officially listed, rather than using potential/expected transactions per second (tps). Even though this isn’t a comprehensive list of blockchains, it is meant to examine a sample of top cryptocurrencies by market cap.
Ethereum: 15 to 25 tps
Bitcoin: 3 to 7 tps
Ripple: 1,500 tps
EOS: 3,996 tps (average case)
Stellar: 1,000 tps
Cardano: 5 to 7 tps
As you can see by these stats, a lot of work is needed to make the Ethereum blockchain more scalable. We should take other factors beyond tps into consideration. For example, cryptocurrencies like Ripple and Stellar are more centralized. Back in June 2018, it was reported that EOS still had 620 bugs and other issues that remained unresolved. Still, Ethereum also faces several challenges besides just reaching higher scalability. Additionally, other blockchains have made huge strides in scalability that have led to faster transaction completion times and decreased fees. For instance, Monero’s bulletproof update (implemented in October 2018) is considered by many to be a scalability game-changer for the privacy coin.
When we consider the potential for improved scalability for the Ethereum blockchain, we should also examine the efforts of the entire ecosystem. One clear advantage of Ethereum over other blockchains is its large community. In addition to several core researchers and developers, Ethereum has a large open-source community. Many projects have also launched their own ERC20 tokens and are working on infrastructure initiatives.
A lot of speakers at Devcon4 highlighted the possibilities of Ethereum 2.0 and the future of scalability.
How Does Changing to Casper Impact Scalability?
Ethereum’s big move from a complete dependency on Proof-of-Work to Proof-of Stake with Casper doesn’t just influence the future of consensus algorithms. It’s also important to understand how this shift will impact the future of scalability.
In 2018, the Ethereum core development team made a decision to stop working on Casper FFG, the hybrid Pow/PoS model they had been developing for some time. As Vitalik Buterin stated, the team opted to work towards “a proof-of-stake and sharded blockchain with the properties that we’re looking for.” This means that Ethereum will focus entirely on Casper CBC, a pure PoS consensus algorithm. (We’ll explain more about the work being done to create a sharded blockchain later in this article.)
Casper doesn’t necessarily have the largest direct impact on scalability. However, it can certainly be viewed as a foundational component that greatly improves the viability of greater Ethereum scalability. Instead of depending solely on a network of physical devices to calculate blocks (PoW), Casper uses virtual coins inside the system to sign each block (PoS). This means that, eventually, the ability of the Ethereum blockchain to process data won’t be limited by computer processing power as it is in 2018. Another benefit of staking is that it requires far less energy consumption, which will make Ethereum and ERC20 token transactions of the future more environmentally-friendly. Moreover, Casper will allow developers to implement all sorts of new scalability solutions that aren’t currently possible with PoW.
Vitalik explained several details about Casper in a tweet storm back in August 2018.
Raiden and Going Off-Chain
Raiden Network is considered by many to be the most popular off-chain protocol for improving Ethereum scalability. According to the project website, Raiden state channels are innovative for quite a few different reasons.
“There are literally no transaction fees, other than for a one-time on-chain deposit and eventual settlement.
Since only the two participants have access to the deposit in the payment channel’s smart contract, payment channel transfers are immune to double-spending attacks, making them as secure as on-chain transactions.”
In many ways, Raiden Network is similar to Lightning Network (Bitcoin’s scalability solution). For instance, both intend to reach 1,000,000 tps once implemented. Still, they also have quite a few key differences. For instance, channels in Lightning are intended to have a limited lifetime. In contrast, Raiden channels can exist forever. Raiden is capable of operating with fewer on-chain transactions vs. Lightning. This means that Raiden network fees should be lower. Meanwhile, Raiden is capable of enabling off-chain transactions for all ERC20-compatible tokens while Lightning isn’t.
In mid-2017, the Raiden development team released Raiden v0.1.0 (“Developer Preview”). We have seen some progress towards the real-world implementation of Raiden technology since then. In July 2018, Raiden released Red Eyes on the Ropsten testnet and plans to launch alpha testing on the Ethereum mainnet later in 2018.
Raiden Network Future Roadmap
Plasma Cash as a Sidechain Solution
Plasma is a series of contracts that run on top of the Ethereum main chain. This solution uses a hierarchical, tree-like network structure of child chains that periodically relays information back to the mainchain. Currently, Plasma is being integrated into both Ethereum and OmiseGO.
In August 2017, Vitalik Buterin and Joseph Poon first introduced the concept of Plasma Cash, a solution that is even more similar to the Lightning Network than Raiden. While Plasma itself is an upgrade, Plasma Cash serves as an upgrade of an upgrade. How do they compare in terms of scalability? Simply put, Plasma only provides the possibility of quadratic scaling. This is a significant improvement, but it’s still not enough to run new types of applications that require more data. In contrast, Plasma Cash supports the exponential growth needed for the blockchain to run IoT applications and become a true “world computer”. Moreover, Plasma Cash generates unique serial numbers for tokens on the network. This comes with many advantages like zero need for two-phase send plus confirmations, simple support for all sorts of tokens (including non-fungible tokens), and better security to avoid cases of theft (invalid exits) or high fees for valid child chain mass exits. Plasma Cash is being integrated into both OmiseGo and Loom Network.
We have also seen some other implementations of Plasma technologies. For example, on November 1, 2018, Elph announced a successful test of Plasma Cash sidechains on the Rinkeby testnet. This solution combines the Plasma framework with Elph sidechains to create a sidechain that holds a two-way, trustless peg. The live demo demonstrates the ability to reach 6,000 tps. More importantly, this sidechain includes all of the inherent security of Ethereum and allows users to withdraw assets back to Ethereum if needed. It also supports Ether, ERC20, and ERC721 tokens.
Elph testnet demo
Sharding is a type of database partitioning that separates larger databases into smaller, faster, more easily managed parts called data shards. In traditional database technologies, we can think of it as using a network of servers that store information based on each user’s geographic location. In blockchain technology, however, achieving a scalable and secure sharding solution has proven to be a challenge for a number of reasons. Traditionally, there has been a requirement for each node to carry all data on the blockchain. With sharding comes the possibility that each node only has to carry a small amount of data in order to complete a transaction. However, this means that blockchain projects have to consider a variety of technical factors in order to design a sharded blockchain that maintains the same level of security as traditional blockchains currently have.
For now, it appears difficult (or basically impossible) to utilize sharding with Proof-of-Work. It’s possible that sharding could work with PoW sometime in the future. For now though, we’ve already seen a lot of progress in the sharding of PoS-based blockchains. As stated in the above section about Casper, Ethereum’s shift towards PoS isn’t automatically/directly improving scalability all that much. However, the move to PoS does make sharding implementation much easier to achieve sooner, rather than later. Ethereum isn’t the only blockchain working on sharding technology. For example, Zilliqa already boasts 2,828 tps thanks to sharding. However, it’s clear that a lot of work still needs to be done to perfect sharding technology. As for sharding projects within the Ethereum blockchain, there are a few relevant examples.
Vlad Zamfir explained proofs as well as research on Casper and sharding in a February 2018 Q&A session.
Sharding Research and Development for Ethereum
Although Vlad Zamfir released a proof-of-concept for sharding at ETHBerlin in September 2018, the implementation of this technology by the Ethereum’s core development team is still a distant goal. Nonetheless, we have begun to see other projects within the Ethereum ecosystem begin to work on sharding.
For instance, back in August 2018, Status announced that it was working on a project called Nimbus. Nimbus is both a research project and a client implementation for sharding, light clients, and next-generation Ethereum technologies that aims to improve scalability. Status also plans to optimize user accessibility via Nimbus by adding a mobile-first implementation to the Ethereum client ecosystem. According to the announcement, Nimbus will optimize for embedded devices as well as enable new use cases (i.e. AndroidTV, point-of-sales units, or IoT devices).
The Path to Serenity (Ethereum 2.0 Upgrade), Notes from Devcon4
At Devcon4, Buterin explained more details about Serenity (also known as Ethereum 2.0), the long-anticipated Ethereum development phase that aims to put all of the scalability research together into one solution. Essentially, Serenity can be summed up as “the creation of a new blockchain that will be fully compatible with the existing Ethereum blockchain.” What does this mean exactly? If everything goes smoothly with Serenity, the Ethereum blockchain could realize a 1000x scalability increase. Moreover, the new system would only need 1GB to run a full node, instead of the current requirement of 8GB. As a real-world example, merchants such as coffee shops would be able to accept Ethereum payments in under 16 seconds. According to Buterin, Serenity will be designed as the “the world computer as it’s really meant to be, and not a smartphone from 1999 that can process only 20 transactions a second.”
“Serenity is a new blockchain in the sense of being a data structure, but has a link to the Proof-of-Work (PoW) chain. The Proof-of-Stake (PoS) chain would be aware of the block hashes of the PoW chain, you’d be able to move eth from the PoW chain to the PoS chain.
So it’s a new system, but it is a connected system and the long, long term goal is that once this new system is stable enough, then basically all of the applications on the existing blockchain can be sort of folded into a contract on one shard of the new system that would be an EVM interpreter written in eWASM.”
Phases of Serenity
Phase 0: Beacon Chain PoS
Phase 1: Shards as Data Chains
Phase 2: Enable State Transitions (EWASM)
Phase 3: Iterate, Improve, Add Tech
Vitalik Buterin explained Serenity in detail at the Devcon4 keynote address in Prague on October 31, 2018.
When Will Improved Scalability Become a Reality?
In late 2018/ early 2019, Ethereum might not have the scalability needed to run large-scale applications. This could change soon afterward, though. For instance, it’s estimated that Casper CBC should be ready by mid-2019. Sharding with Casper (Serenity a.k.a. Ethereum 2.0) could be implemented sometime in 2020. We are beginning to see progress from the Ethereum core team and several projects within the ecosystem. Yes, some of the current technical solutions are probably more effective or closer to implementation than others. Still, we shouldn’t just think of these technologies only as individual solutions. We should also consider how these technologies can be combined and how they will work together to move the capabilities of blockchain technology forward. Looking at the big picture, the convergence of these (and potentially more) scalability solutions shows that there are a variety of ways in which scalability goals can be reached in the near-term.
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