The most prominent blockchain networks, Bitcoin and Ethereum, have struggled with scalability issues since inception – posing an obstacle for mass adoption and the everyday usage of cryptocurrency.
With the ability to process only up to 15 transactions per second (TPS) currently, Ethereum is preparing to employ second-layer solutions that will allow the network to reach one million TPS.
A Blockchain With Millions of Users
In an effort to overcome issues with network congestion and overall throughput, Ethereum developed two primary solutions – sharding and plasma – that work in tandem to increase the network’s transaction capacity.
In a recent OmiseGO AMA, Vitalik Buterin conveyed that layer improvements are currently being tested on the Ethereum testnet to support potential decentralized applications (dApps) with millions of users.
Sharding and Plasma Solutions
Sharding is a scaling solution that uses shards, or micro-chains, to process separate types of transactions on the Ethereum blockchain. By classifying transactions on individual chains within the main Ethereum blockchain, only a group of nodes need to verify the relevant transaction.
Sharding in Ethereum
Sharding removes the need for the entire network of nodes to process every individual transaction – increasing TPS on the Ethereum blockchain.
Similar to Bitcoin’s Lightning Network, plasma adds a second layer of off-chain branches to the main Ethereum blockchain in order to process high-volume smart contract protocols more quickly.
Plasma compartmentalizes network usage through child chains that process transactions separate from the main chain, updating the entire blockchain only when transactions are complete.
Each child chain has the same functionality of the main Ethereum protocol, enabling entire decentralized applications to run congestion-free on their own blockchain branch.
In a May 30th OmiseGO AMA on YouTube, Buterin explained how the two solutions work in complement:
“The reason I think layer 1 and layer 2 [networks] are complementary is because ultimately, if you look at the math, the scalability gains from the layer 1 improvements and layer 2 improvements do ultimately multiply with each other. If you have a Sharding solution, the Sharding solution itself might increase the scalability of Ethereum by a factor of 100, or eventually even more. But then, if you do Plasma on top of the scalability solution, then what that means is, you’re not just doing 100 times of the amount of activity but you are doing 100 times the amount of entrances, the amount of exits, and despute resolutions”
Together, the two scaling solutions can compound the network’s TPS by 100x each while retaining security on the Ethereum protocol, creating a decentralized ecosystem that can potentially support one million transactions per second.
Adding to his statement, Buterin describes the impact of the emerging scaling solutions on the Ethereum network:
“So if you get a 100x from Sharding and a 100x from Plasma, those two basically give you a 10,000x scalability gain, which basically means blockchains will be powerful enough to handle most applications most people are trying to do with them.”