In the context of decentralization, security, and scalability, the Blockchain Trilemma refers to the generally held notion that decentralized networks can only deliver two of the three benefits at any given moment.
In this article, we more closely into the matter, assessing all the most relevant aspects of the blockchain scalability trilemma.
Vitalik Buterin invented the term “blockchain trilemma,” which refers to a conundrum that blockchain engineers face while balancing three competing demands at once: decentralization, security, and scalability.
According to a commonly held opinion, decentralization, security, and scalability can only deliver two of the three benefits at any given moment.
The trilemma could be solved once and for all thanks to a wide variety of Layer-1 and Layer-2 solutions that have been developed in the decentralized ecosystem.
- Security: Malicious actors should be unable to take control of blockchain networks if strong defenses protect them.
- Scalability: Increasing the number of transactions or users on a blockchain should not result in higher costs or longer transaction times.
- Decentralization: As opposed to a single owner, blockchains share network control with all members.
There is an incentive to limit the spread of blockchain nodes either geographically, in quantity, or both to maximize network performance on a blockchain network. PoW networks are less secure due to this shift toward more centralization.
In an open network with few nodes, a 51% assault is more likely since hackers may gather the necessary hashing power more efficiently. Hackers can seize control of a network and alter transactions to make money.
The Ethereum Classic (ETC) network, a fork of Ethereum (ETH), underwent three 51% assaults in August 2020, reorganizing over 4,000 blocks, for example.
As a result, the network lost millions of dollars in value due to manipulating data and duplicate spending of ETC currency. The security of the blockchain is a vital component of the network and cannot be ignored.
It is possible to have high transactional throughput on a blockchain, but only if the blockchain can handle it in the long term. Because of this, the performance of the blockchain will not be negatively impacted when more use cases and adoption occur.
Scalability refers to the ability of a blockchain to handle increased usage. Blockchain Trilemma states that scalability is conceivable, but security or decentralization will be compromised.
At this point, no blockchain network can compete with the network settlement and usability of older, centralized systems.
Scaling remains a great difficulty for today’s top decentralized networks, even though many blockchain platforms have already established decentralization and security as core features.
Blockchain technology is based on the principle of decentralization, which is at the heart of many of the initiatives in the ecosystem. Dispensing with intermediaries in all sectors is made possible by utilizing decentralized methods and technology.
Decentralized finance (DeFi) platforms, rather than middlemen, may share profits and governance with users and the larger community by eliminating banking institutions from financial products.
Since no single entity has control over or censorship over the data flowing across decentralized networks, they are fundamental to how the internet functions. Optimizing decentralization, on the other hand, tends to reduce network throughput.
Transaction speeds may slow as more miners establish a Proof-of-Work (PoW) network through consensus, which is seen as a barrier to mainstream adoption.
The Ethereum 2.0 and Polkadot Solutions
For initiatives like Ethereum, which don’t depend on another network, sharding has become a popular alternative. Another way, when a network “shards,” it divides the blockchain’s transactions into smaller, more manageable chunks for the network to process more quickly.
As a result, additional transactions may be processed simultaneously without any delays. In order to keep data safe, the many chain shards communicate and submit data to the blockchain.
An off-chain (verified) proof of the rollup is sent to the main Ethereum blockchain, which processes the rollup and returns it to the main chain. It’s a lot like riding with a friend in a car. Due to their ability to decrease the amount of data required for a transaction, rollups are efficient.
Polkadot prefers the notion of several blockchains working together rather than a one-blockchain solution (interoperability). A “relay chain” serves as the network’s backbone, allowing for a highly scalable network. As separate chains that link to the main relay chain, parachains are used.
As a result, the chains are able to grow independently, but the network as a whole is more secure because of it.
Emerging solutions may be able to overcome the blockchain trilemma, which offers substantial obstacles to blockchain adoption.
Network security, decentralization, and scalability must all be optimized. Considering the importance of this issue, it’s not surprising that so many teams of experts have devoted themselves to it.