Scalability, Part 1: Building on Top
Building on Top: Scaling Ethereum with Protocol Enhancements
Ethereum, like other cryptocurrencies, faces a fundamental problem when it comes to scaling: the consensus architecture relies on every node processing every transaction, which is a deep and complex process. This makes it difficult to achieve high degrees of security while also scaling up to Visa or SWIFT levels of transaction volume. However, there are ways to improve the capacity of the Ethereum network without sacrificing decentralization.
Structural Alterations to the Protocol
One of the first steps in increasing space efficiency is to make structural alterations to the protocol. Ethereum has already made this shift from a UTXO-based architecture to an account-based architecture. This change allows for more efficient storage of transactions and reduces the amount of data that needs to be processed.
Batching
Batching is another constant-factor improvement that can be achieved by putting multiple sends into a single transaction in the data fields and then having a forwarding contract split up the payment. This approach can significantly reduce the number of transactions that need to be processed, making it more efficient.
Micropayment Channels
Micropayment channels are a common dream application of cryptocurrency, allowing for the payment of tiny chunks of computational or physical resources. Existing cryptocurrencies are useful for much smaller payments than were possible before, but if we want to pay $0.01 at a time, we need a much better scheme. Micropayment channels are one approach that can be used to achieve this.
Probabilistic Micropayments
Probabilistic micropayments are another approach that can be used to achieve more efficient payments. This approach involves performing an action that has a specified probability of allowing a certain payment to happen in the future. In the long term, both expenses and receipts will be roughly the same as in the non-probabilistic model, but with the benefit of saving 99% on transaction fees.
Off-chain Oracles
Off-chain oracles are a way to take the entire computation off the blockchain. This is achieved by using a clever economic hack: the code still goes on the blockchain, and gets recorded there, but by default the computation is decided by oracles which run the code off-chain in a private EVM and supply the answer, also providing a security deposit. When the answer is supplied, it takes 100 blocks until the answer is committed; if everything goes well, the answer can be committed to the blockchain after 100 blocks, and the oracle recovers its deposit and a small bonus.
Shadow Chain
The protocol can be extended even further by creating an entire "shadow chain", with computations happening off-chain but state transitions being committed back to the main chain after 100 blocks. Oracles can add new blocks to the "tail" of the chain, where a block consists of a list of transactions and a [[k1, v1], [k2, v2] ... ] list of state transitions caused by those transactions. If a block is unchallenged for 100 blocks, the state transitions are applied automatically to the main chain.
Conclusion
In conclusion, scaling Ethereum is a complex problem that requires a multi-faceted approach. By making structural alterations to the protocol, batching, using micropayment channels, probabilistic micropayments, off-chain oracles, and shadow chains, we can significantly improve the capacity of the Ethereum network without sacrificing decentralization. These approaches can be used together to achieve even greater efficiency and scalability.
Future Directions
The future of Ethereum scaling is bright, with many exciting developments on the horizon. Some of the key areas of focus include:
- Improving the efficiency of the Ethereum network through the use of more advanced protocols and technologies.
- Developing new use cases for Ethereum, such as decentralized finance (DeFi) and non-fungible tokens (NFTs).
- Building out the Ethereum ecosystem with국more applications and services.
- Exploring new blockchain architectures and consensus algorithms that can support even greater scalability and security.
Overall, the future of Ethereum is looking bright, with many exciting developments on the horizon. As the Ethereum network continues to grow and evolve, we can expect to see even greater efficiency, scalability, and innovation in the years to come.
Source: https://blog.ethereum.org/en/2014/09/17/scalability-part-1-building-top
