How realistic are the complexities of the blockchain trilemma? Chia challenges the claims of projects that purport to have solved this fundamental issue. With a critical eye, the piece explores the trade-offs between security, decentralization, and high transaction per second (TPS) rates, arguing that achieving all three simultaneously remains an elusive goal. Chia Network’s stance is clear: prioritizing security and decentralization is paramount, even if it means accepting limitations on TPS. The article uses real-world data and mathematical calculations to debunk high TPS claims, illustrating the practical challenges and the inevitable compromises blockchain projects must navigate. This thought-provoking read is a must for anyone interested in the underlying dynamics of blockchain technology and its application in the real world.
Understanding the Blockchain Trilemma
The blockchain trilemma challenges developers to balance scalability, security, and decentralization in blockchain technology, a balance crucial for wider adoption.
Defining the Trilemma
The blockchain trilemma posits that it is difficult for a blockchain network to simultaneously achieve high levels of decentralization, security, and scalability. Typically, enhancing one aspect can compromise the others. For instance, increasing scalability may lead to reduced decentralization as more resources are concentrated to handle larger volumes of transactions.
Chia’s Critical Article on the Blockchain Trilemma
On March 1st 2024, Chia Network posted this article about the classic blockchain trilemma, with a skeptical take on what might be promised by other blockchains when Chia just focusses on two elements of the crucial three sectors to this trilemma
“Numerous projects claim to have overcome the blockchain trilemma. I find that claim dubious at best. I’m also deeply suspicious that they’ve solved it “academically.” I’m not going to explain all of the ways that they can mislead you – but I am going to apply some cold hard reality of the actual world on various project’s transactions per second (TPS) claims.
The Trilemma
“The Trilemma states that a blockchain can be two of secure, decentralized, or high TPS. Chia chose the first two because we believe that losing either of the first two means you have a really crappy database and not a blockchain. We also believe that the trilemma is really a dilemma as a centralized “secure” blockchain is an oxymoron – but that is for another day.
“Here is one of the reasons why. In the US the average upload speed for a fixed broadband internet connection was 35 Mb/s as of April 2023. Wireless is less than half that.
“I found three different numbers when attempting to estimate the average size of a Solana transaction – a blockchain known for high TPS. The highest was from a TPS study that assumed “no more than 176 bytes,” and the lowest I computed was 99 from a post on how to increase the number of accounts that can be sent to in one transaction. A random developer implied the average was 137. Since the average of all three estimates rounds to 137, we will use that.
Mathing It Out
“Now, let’s do some math. The speed in bytes of the average internet link is 35 × 1000 × 1000/8 or 4,375,000 Bytes/s. That means that 4,375,000/137 leads to a maximum one peer upload TPS of 31,934. When you divide this by the number of peers in a Bitcoin node that’s 266 TPS – and if you use the current Chia default of 40 it’s only 798 TPS. These are also wildly unrealistic numbers because they ignore protocol overhead, TCP overhead, and any of your kids trying to watch Netflix or you being on a Zoom call.
“But that’s not all!
“The expensive computer you need to keep up with all that TPS also has to store the historical state of the blockchain. At 798 TPS, that’s adding about 9.5GB per day to that database for a yearly addition of 3.5TB1. And that drive has to be an SSD to keep up with the fast pace of transaction updates. As of this writing, a Samsung 8.0TB SSD will set you back $530 but won’t even get you three years of operation. Don’t even think about what the EBS bill would be if you chose to host in AWS.
“High TPS “blockchains” will be Proof of Existing Data Center for the foreseeable future. These nodes can not be run anywhere but on a fiber backbone hosted in the data centers that already control our lives. If your definition of decentralized is “fine with the cost of running a node being prohibitively expensive and only located in data centers,” you’re not going to make it.
“If any blockchain claims it has a high TPS and is decentralized and secure – at least for now, we can assume it’s snake oil.”
Does this Critique Stack Up? Further Context
Historical Context and Vitalik Buterin’s Role
Vitalik Buterin, the co-founder of Ethereum, brought the blockchain trilemma into the spotlight, emphasizing the struggle between the three primary attributes. His work has been central to discussions about optimizing blockchain frameworks, as he contends that a truly efficient system has not yet achieved these three attributes in perfect harmony.
Implications for Blockchain Technology
The blockchain trilemma significantly impacts the potential for blockchain adoption. Finding a delicate balance is imperative for blockchains to be widely used and trusted. Security must remain robust to prevent breaches, while decentralization is essential to maintaining a network free from control by any single entity. Scalability ensures the network can grow and handle increased demand without losing efficiency or becoming cost-prohibitive.
Solutions and Advances Addressing the Trilemma
The blockchain trilemma challenges developers to balance scalability, security, and decentralization. Innovative approaches, such as Layer-2 scaling solutions, sharding techniques, and consensus protocol innovations, strive to create harmonious platforms without compromising on core principles.
Layer-2 Scaling Solutions
Layer-2 scaling solutions are pivotal for enhancing transaction throughput without burdening the main blockchain, thus addressing scalability. Rollups have emerged as a key technology in this domain, where they execute transactions off-chain and later report the results to the main chain, reducing the load and increasing transaction speed. Ethereum, for instance, has significantly benefited from rollups to improve its network’s capacity.
- Notable Layer-2 Implementations:
- Optimistic Rollups
- zk-Rollups
Both rollup types focus on transaction throughput while maintaining a robust degree of security and decentralization. Developers are actively refining these solutions to seamlessly integrate with existing blockchains like Ethereum 2.0.
Sharding Techniques
Sharding distributes the network’s load into manageable partitions, addressing scalability challenges directly. Ethereum’s planned upgrade to Ethereum 2.0 encompasses sharding as a core feature, aimed at dividing the network into numerous shards that can process transactions and smart contracts in parallel. This could drastically uplift the entire network’s capacity.
- Sharding Benefits:
- Increases transactions per second.
- Reduces network congestion.
Sharding is an ongoing area of research and development, as it must maintain robust security measures and a decentralized consensus across its shards.
Consensus Protocols Innovations
Replacing traditional Proof-of-Work (PoW) with Proof-of-Stake (PoS) consensus mechanisms is a significant shift in enhancing security and energy efficiency. PoS lowers the computational power required to validate transactions, thereby scaling the system. Ethereum 2.0 is a prime example of a cryptocurrency transitioning to PoS to achieve a more sustainable and scalable network.
- Consensus Innovations:
- Hybrid Proof of Work/Proof of Stake
- Delegated Proof of Stake
Such consensus models not only contribute to solving the trilemma but also improve governance models through staking incentives and validator responsibilities. The evolution of these protocols is critical for the future of cryptocurrency systems as they offer a more balanced approach to the trilemma.
Impact and Adoption of Scalable Blockchain Solutions
Scalable blockchain solutions are critical in achieving high transaction throughput, which is essential for widespread cryptocurrency adoption and the development of sophisticated decentralized applications.
Influence on Cryptocurrency Adoption
Scalable blockchain technologies have a profound impact on the speed and efficiency with which transactions are processed. As blockchain systems evolve to address the scalability issue, the potential for cryptocurrency to gain mass adoption grows. Higher transaction speeds and more robust smart contract capabilities enhance the user experience, making it more comparable to that of traditional financial systems. Developers are increasingly attracted to platforms that support layer 2 solutions, which enable greater scalability without compromising on decentralization. These improvements help to foster trust among users and pave the way for crypto to become a viable alternative to conventional currencies.
Future Prospects and Developments
Looking forward, the quest for scalable blockchain solutions is driving continuous progress in the field of Web3 and the broader decentralized ecosystem. Innovations like sharding and state channels hold the promise of increasing transaction throughput significantly, allowing decentralized networks to support a much larger array of applications. This includes everything from simple currency transactions to complex smart contracts that power decentralized finance (DeFi) and other Web3 functionalities. With each advancement, cryptocurrencies stand to become more integrated into daily life, providing a solid foundation for future decentralized applications and potentially reshaping how digital interactions occur across numerous industries.
Frequently Asked Questions
Understanding the blockchain trilemma is critical for recognizing the challenges and advancements in the blockchain space. This section addresses common inquiries on the subject.
What are the core components of the blockchain trilemma?
The blockchain trilemma is comprised of three principal components: security, decentralization, and scalability. A balance between these factors is difficult to achieve, as enhancing one aspect tends to compromise at least one of the others.
How do newer blockchains like Solana approach the trilemma?
Newer blockchains such as Solana use innovative consensus mechanisms and network designs to enhance scalability without significantly undermining security or decentralization, offering a different approach to the trilemma.
Can layer-2 solutions effectively address the blockchain trilemma?
Layer-2 solutions operate on top of the existing blockchain, aiming to improve scalability and reduce costs. They can effectively address certain facets of the trilemma, especially by offloading the transaction throughput from the main chain.
Is it possible for a blockchain network to fully overcome the scalability trilemma?
While it is a persistent challenge, some believe that there may be potential for a blockchain network to find a suitable compromise that offers an acceptable degree of all three trilemma components, if not fully overcome the inherent limitations of the trilemma.
Disclaimer
The information provided on this page does not constitute investment advice, financial advice, trading advice, or any other sort of advice and it should not be treated as such.
This content is the opinion of a third party and this site does not recommend that any specific cryptocurrency should be bought, sold, or held, or that any crypto investment should be made.
The Crypto market is high-risk, with high-risk and unproven projects. Readers should do their own research and consult a professional financial advisor before making any investment decisions.
