How 4 Companies are trying to solve the ‘impossible triangle’ of Blockchain through sharding (and how they compare)
Mature Blockchains like Bitcoin and Ethereum — while different in their security protocols — are both facing the same problem. That is achieving and maintaining scalability into a transaction range of current mainstream payment solutions like VISA. While the two most prominent blockchains are highly decentralized and secure, they can currently only guarantee both on a rather small scale.
Bitcoin’s block time is 10 minutes with a peak transactions-per-second (TPS) of 6 while Ethereum’s block time is 15 seconds with a peak TPS of about 20. Visa’s 50 year old centralized payment protocol in comparison can handle around 24,000 transactions per second. The current load on their system sits at about 1,700 TPS. In order for any Blockchain to enter the mainstream market, it needs to be able to scale to a point where it would be able to handle current and future throughputs of transactions better than what Visa is currently capable of — and way more.
How to make the impossible triangle possible
While there are many other ideas (that won’t be covered in this article), one of the most promising solutions that could achieve the necessary scaling is called “sharding”. It is actually a rather old technology used to split up databases and is now being used to split the main chain into smaller shards. In order to compare 4 of the most promising approaches we need to first understand what sharding is.
Originally, all nodes within the entire network needed to confirm all transactions and stored all of the data of all blocks. Sharding means splitting the chain temporarily so that each shard acts as its own Blockchain, so that the nodes assigned to that shard only have to take care of a portion of the entire network’s load.
There are 3 main types of sharding:
Network Sharding
Foundation; Nodes on the Blockchain are assigned to shards
Transaction Sharding
The entire networks transactions are divided into shards that can be processed in parallel by network shards
State sharding
Splitting complete ledgers into different shards so one node does not need to store the entire Blockchain’s info
The Line-up
Near
… Is an open source, decentralized development platform to build Web applications on. It is a base-layer blockchain (with proof of stake) using a sharding technology they call “nightshade”.
Elrond
… is a blockchain created with pure scalability in mind so it can serve as the base for a new secure type of internet. It is also a base-layer blockchain running ‘secure proof of stake’ with a sharding technology they call ‘adaptive state sharding’.
Harmony
… is a sharding protocol that mainly focuses on providing cross chain development opportunities for Dapps (decentralized apps). It uses “random state sharding” to securely scale its network.
MultiVAC
… is a blockchain platform that focuses on bringing blockchain capabilties to an industrial scale by pioneering a “flexible sharding” approach that eliminates scalability bottlenecks without introducing limitations for developers. It uses “all-dimensional” sharding that is built into the base of the Blockchain and Verifiable Random Function (VRF) “dynamic re-sharding” to safely grow shards on the blockchain.
Basic financial Comparison (as of April 8, 2021)
The current NEAR Protocol price hovers around $6 USD with a 24-hour trading volume of $162 Million USD. The current CoinMarketCap ranking is #56, with a market cap of about $2 Billion USD. It has a circulating supply of 342 Million NEAR coins and a max. supply of 1 Billion NEAR coins.
The Elrond price (after its redenomination) is quite high at currently $176 USD with a 24-hour trading volume of $245 Million USD. The current CoinMarketCap ranking is #41, with a market cap of $3 Billion USD. It has a circulating supply of 17 Million EGLD coins and a max. supply of 31 Million EGLD coins.
The price for Harmony is much lower at $0.158463 USD with a 24-hour trading volume of $463 million USD. The current CoinMarketCap ranking is #72, with a market cap of $1.5 Billion. It has a circulating supply of roughly 9.5 Billion ONE coins and a max. supply of 12.6 Billion ONE coins.
MultiVAC hasn’t launched their Main Net yet and thus comes in at the lowest token price of currently $0.005373 USD and a trading volume of $1.8 Million. Its CoinMarketCap ranking is #822 and has a market cap of $19 Million. It has a circulating supply of 3.5 Billion MTV and a max supply of 10 Billion MTV coins.
While Elrond and Near have seen changes of +8% and + 21% in the last 30 days, Harmony rose an impressive 261%. MultiVAC however, tops this by more than double the amount at a staggering 550% increase in price in the last 30 days. With MultiVAC being the only coin that is not yet available on Binance, significant changes in price can be expected once it makes the jump and becomes available for a larger audience. When MultiVAC releases their Main Net we should see a large increase in its price as well.
Sharding Approaches, Security and Transaction Speed
All of the protocols presented are similar in their goal: to achieve blockchain scalability and also use some form of sharding. However, they differ significantly in how they go about doing so as well as the use cases that the specific blockchain will be able to serve, once fully operable.
NEAR for example is the ‘least’ sharded protocol. The team argues that in order to be scalable, a blockchain does not need to run sharded chains. Instead it uses a type of sharding called “nightshade”: There is only one ‘main-chain’ that records all the information from all shards as ‘chunks’ which are produced by ‘chunk producers’ of each shard. As a consequence however, some chunk producers need to maintain the state of the shard which makes it vulnerable. The protocol tries to counteract this by using a state validity challenge (a block cannot be changed without proof) as well as by hiding its validator nodes. NEAR Protocol is currently able to process over 1000 transactions per second with 1 shard, planning to get closer to 10,000 TPS in 2021 with a total of 8 shards.
Elrond on the other hand uses sharding in all three categories (Network, Transaction, State), meaning that the protocol splits nodes into shards that create their own chains, only handle part of the transactions and also only store part of the data. Because of this, it is able to reshuffle nodes after a certain amount of time and assign them to new shards (which also happens in a fully randomized manner) This adds a level of security as attackers cannot predict which shard a node will be assigned to. This is important as the number of nodes that need to be compromised in order to take over one shard shrinks directly proportional to the number of shards existing in a network. Elrond can currently handle about 15,000 TPS, while hitting a peak of 260,000 TPS in their testnet.
Harmony, just like Elrond, uses the same approach with all three types of sharding build into their protocol. However, Harmony focuses solely on a more thorough random reshuffling of nodes to counteract the loss of security through numbers. It does this by executing both, a VRF (Verifiable Random Function) as well as VDF (Verifiable Delay Function) with each reshuffling process. While being very secure, this leads to synchronization downtimes because it is done at the end of every epoch. Harmony achieved a peak of 118,000 transactions per second on their testnet in 2018 with 100 shards (400 nodes each).
MultiVAC balances that triangle of decentralization, scalability and security while focusing on applicable use cases in the commercial space. In the end it does not matter how balanced your protocol is if it is impracticable to use for developers, and MultiVAC solves that issue.
While also using all of the three sharding types, there are two additional key areas where MultiVAC sets itself apart.
One is its ‘flexible sharding’ technology. While other protocols use fixed shard dimensions, MultiVAC allows developers to alter shard sizes in relation to their specific use case. This means that if a higher level of security is needed for large transactions, the shard size can be increased dynamically. The same can be done for faster throughput if developers want that.
Second, MultiVAC is unique in how it addresses state sharding. MultiVAC not only splits stored data but also the labor process behind it. While there are dedicated storage nodes that store the data, they do not have the rights to add, delete or modify it. This is reserved for mining nodes, with miners only able to store a minor portion of the data for their shard to be able to verify its validity. Similar to Harmony, MultiVAC uses Verifiable Random Function, but uses a unique approach called “Dynamic Re-sharding” that ensures a shard’s security and self-growth capacity.
Another great benefit of MultiVAC is that almost anyone can be a miner, even with just a laptop. All you need is a dual-core and 2GB of RAM. With its flexible sharding approach, MultiVAC has a current peak of 30,784 transactions per second with 64 shards and 200 nodes on each shard. However the transactions speed may increase in the near future as more shards and nodes are added.
Which of the candidates will actually be able to hold up against real world throughput remains to be seen, as previous sharding attempts have found themselves hitting too many hurdles and were ultimately forced to give up. This time however, some ideas sound very promising in addressing most if not all previously identified issues and we hear promises of TPS peaks in the millions. If you want to dive deep into each of the protocols and all of their finer details, you should have a look at their sharding white papers, which are explaining the technology behind their solutions a bit more in-depth.
