While trade-offs are inevitable, experts interviewed by crypto.news believe the blockchain trilemma sheds light on the challenges developers face and ways to deal with them.
Coined by Ethereum co-founder Vitalik Buterin in 2017, the blockchain trilemma highlights the challenges developers face when creating distributed ledger systems. According to Buterin, architects must make trade-offs and prioritize two of the three key features.
In an interview with crypto.news, Luke Nolan, a research fellow at CoinShares, agreed with this view. Nolan believes that the blockchain trilemma in a broad sense effectively illustrates the challenge of fully realizing all three characteristics. He emphasized that developers often sacrifice some or both aspects when optimizing one feature.
The blockchain trilemma
Alex Dulub, founder of Web3 Antivirus, suggests that speeding up a blockchain can sometimes compromise its security. He believes that solutions such as Layer-2 (L2) networks and sidechains, which handle transactions outside the main blockchain, can increase speed and scalability, but can also introduce new risks.
Dulub thinks that bugs in smart contracts, centralization risks and potential attacks are the main vulnerabilities for blockchains that want to improve all three aspects.
Neville Grech, the founder of Dedaub, a blockchain security company, points out that increasing parameters such as block size and frequency to improve speed can require more computing power, bandwidth and storage than average nodes can handle. This could lead to a more centralized network structure, with only a few nodes fully participating in the blockchain.
While adjusting the validation process could speed up a network, Grech warns that “it could expose the blockchain to vulnerabilities and create validation disputes and temporary forks.”
Moreover, according to him, reduced participation of nodes and validators in the verification process could jeopardize the decentralization of the network and the integrity of the blockchain.
To illustrate, despite being decentralized and secure with over a million BTC miners worldwide, the Bitcoin network processes an average of 8.35 transactions per second (TPS). This figure is significantly lower than that of centralized money transmitters such as Visa, which has a TPS range of 1,500 to 2,000.
Blockchain TPS Data | Source: Chainspect
In contrast, Zcash’s blockchain typically operates at an average speed of 26 transactions per second (TPS) for unshielded transactions. However, a September 2023 report found that more than 50% of Zcash’s hash rate was controlled by ViaBTC’s mining pool, exposing the network to a 51% risk of attack.
Take Solana (SOL) as another example, with a current real-time TPS of 772, according to data from Chainspect. Despite the tenth major outage in February 2023, the network has shown high stability since then.
In a July 21, 2023 report, the Solana Foundation declared 100% uptime for the Solana blockchain. This performance followed improvements in the ratio of voting to non-voting transactions.
In this case, Luke Nolan, a research associate at CoinShares, points out that the main trade-off was decentralization, and he says “security has come to a minimal trade-off.”
He emphasizes that the price to use a Solana validator can be quite high, ranging from $3,000 to $5,000. These high costs make it expensive for the general public to operate a Solana validator, which poses the risk of centralization.
Hardware Requirements for Running a Solana Node | Source: Solana Labs
According to data from Solana Compass, Solana currently has a total of 2,919 nodes with over 433,000 stakers. The network’s node count has decreased significantly since March 2023, after reaching an all-time high (ATH) of 2,564 operational nodes.
Although the number of Ethereum nodes has continuously decreased since mid-January and currently hovers around 7,000, it is still 2.4 times higher than that of Solana’s operating systems.
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This number is reasonable considering that Ethereum nodes require lower hardware requirements compared to Solana and cost between $500 and $1,000. Furthermore, the number of Ethereum stakers is also significantly higher than Solana’s – currently it stands at over 921,000.
Hardware Requirements for Running an Ethereum Node | Source: Ethereum.org
Nolan also said that Ethereum has set aside the idea of Layer-1 (L1) scaling for the time being to avoid compromising decentralization or security. Currently, Ethereum processes an average of approximately 13 transactions per second (TPS), with the highest recorded TPS being 62.34.
“In general, I wouldn’t say that the number of validators is the No. 1 measure of decentralization, but from a philosophical point of view you could run an Ethereum node very cheaply and help the chain move forward even without staking 32 ETH – although of Of course you wouldn’t earn anything.”
Luke Nolan told crypto.news.
Solutions
To show that the blockchain trilemma is not an unbreakable rule, companies are introducing creative solutions that challenge the idea that speed and security are always at odds. Let’s explore some of the best solutions that aim to balance scalability, security and decentralization.
- L2 networks: These solutions improve Layer-1 blockchains by increasing transaction speed, reducing costs, and improving overall scalability. L2s allow the main chain to focus on security and decentralization, while Layer-2 networks provide scalability and efficiency. Technically, L2 blockchains inherit the security of L1 networks.
- Consensus mechanism changes: New consensus mechanisms, such as Proof of Stake (PoS) variants, aim to balance security and speed without major compromises. Moving from Proof of Work (PoW) to PoS can be an important way to increase transaction throughput while reducing processing costs.
- Separated witness (SegWit): Implemented in Bitcoin in 2017, SegWit scales blockchain throughput by separating transaction signatures from transaction data and storing them differently. This separation improves space efficiency, streamlines authentication, and reduces the overall size of transaction records.
- Shards: Techniques such as sharding distribute transaction processing across smaller groups of nodes, increasing speed while maintaining security. For example, Harmony blockchain uses sharding and currently achieves a finality time of two seconds, while Solana’s Time to Finality (TTF) is approximately 12.8 seconds.
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Rollups:
- Zero-knowledge combinations (zk-rollups): These rollups bundle hundreds of off-chain transactions and generate a cryptographic proof, also called a zero-knowledge proof.
- Optimistic roll up: These operate under the assumption that transactions are valid by default. They perform the calculation on the Layer-1 (L1) blockchain only in case of a dispute. This introduces a final delay in verifying the legitimacy of transactions before they reach the L1 network. If a transaction is found to be invalid, it can be reversed to avoid any negative consequences.
Conclusion
Fast blockchains do not directly sacrifice decentralization and security; instead, the blockchain trilemma sheds light on the challenges developers face and the incidental tradeoffs they must deal with.
“In a nutshell, while speed often presents challenges versus security, the blockchain community’s relentless innovation can provide some solutions. It’s not just about choosing between speed and safety; it is about smartly designing the blockchain to balance both.”
Neville Grech told crypto.news.
Dulub emphasizes that “careful design, rigorous testing, and continued research are key to mastering the challenges” associated with the blockchain trilemma.
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