Ethereum and the Scalability War

Ethereum Coin

Advancing technologies have ensured that blockchain networks become more attractive than ever. At the same time, everyone understands that certain issues still need resolving. One of them is scalability. The problem is significant since the original designs of blockchains do not prove suitable for modern needs. Apart from that, you need to know how can Bitcoin promote illegal activities.

Ethereum’s Difficulties

Ethereum is having a greater issue with scalability than other blockchains are. The network is the host for numerous Dapps and platforms belonging to Ethereum. It also offers hosting services to non-Ethereum platforms and Dapps.

Naturally, the traffic is high at any given time, often leading to congestion. In turn, the transaction throughput is lessened, and the gas fees also shoot up. At peak times, the pricing of gas is 30-50 times greater than during non-peak times. Thus, the Ethereum team is engaged in heavy research. It also tests and implements diverse scaling solutions. The idea is to enhance the speed of transactions and throughput, 24 x 7. At the same time, the experts do not wish to compromise on security issues and decentralization.

Possible Solutions

The current model does not promise any resolution to the scalability problem. Therefore, the Ethereum team is relying heavily on the layer-2 model. They will publicize Ethereum 2.0 in 2022. Therefore, the team has a roadmap in place. The roadmap consists of two phases, with a requiem between them.

First Phase

It consists of short-term scaling solutions, suitable for the present and near future. They are off-chain in nature. They will come into play from the L1 Mainnet. Since their deployment is being done separately, the current Ethereum protocol need not undergo any changes.

The L-2 scaling changes comprise of –

  • Rollups, which will take charge of transactions occurring outside layer-1. When the verification and consensus process are complete, the data will get recorded on layer-1. Native Ethereum security will take charge of securing these rollups.
  • State Channels, which will utilize multi-signature contracts for permitting speedy transactions. Furthermore, these transactions are off-chain and free. By concluding the transactions, Mainnet will ensure the lessening of fees, latency, and congestion.
  • Sidechains, which will run parallelly to Mainnet. They are perfectly compatible with EVM blockchains. They are also 2-way bridges for communicating with Ethereum. They operate via their own consensus regulations.
  • Plasma, which will be a unique blockchain. It will connect to the main Ethereum chain.

Now, Ethereum 1 must become more friendly with Rollups. Therefore, the base layer scaling of Ethereum must concentrate on each block’s data storage capacity. If it goes beyond -60kb/s, the rollups’ scalability will rise.

Multiple scaling solutions are excellent for lessening overall congestion and working harmoniously for exponential effect. They are also great for removing the risk resulting from a single point of failure.

Requiem

It refers to the Docking of Ethereum or the Ethereum 2.0 Merge. Here, the consensus mechanism will move away from proof-of-work to initiate proof-of-stake. In other words, the ETH1 era (PoW) will end, and allow the ETH2 era (PoS) to take over.

There will be a merging of the Ethereum Mainnet and the Beacon chain PoS system. This system runs parallel to the Ethereum Mainnet that remains secured to the PoW consensus mechanism.

When the two systems promise greater sustainability, scalability, and security, the Merge will happen.

Second Phase

Here, on-chain scaling solutions come to the fore. They demand changes in the Ethereum Mainnet. These L1-scaling solutions concentrate heavily on sharding. Sharding refers to the horizontal splitting of a database, such that there is the splitting of the load.

Regarding Ethereum, sharding refers to the creation of shards. They are new chains that lighten a validator’s load. In other words, the Mainnet will implement sharding. Therefore, the validator will not have to engage in tedious transaction processing. In turn, there will be a reduction in congestion on the blockchain, and enhancement of transactions/second.

Despite these plans, experts are skeptical. They believe that not enough efficacious cross-chain solutions are available for providing essential interoperability. In the absence of interoperability, blockchains cannot display themselves as a singular ecosystem. They will not be able to give an impetus to user experience. They will not be able to enhance efficaciousness or even permit wider adoption.

Nonetheless, Ethereum might become highly scalable, thanks to the Ethereum roadmap.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.