Addressing the Performance of Blockchain by Discussing Sharding Techniques

Abstract

Blockchain technology is extensively used for cryptocurrencies and is considered for industrial applications due to features like decentralization, anonymity, and a tamper-proof history of transactions. However, the well-known blockchain trilemma of being unable to simultaneously meet the properties of decentralization, security, and scalability (DSS) negatively impacts widespread acceptance. Numerous solutions have been put forward in response to this challenge, aiming to increase performance and scalability while retaining the decentralized and trustless aspects. They range from introducing off-chain technologies to changing consensus algorithms and on-chain data structures. One of the most effective methods to accomplish horizontal scalability along with the growing network size could be sharding, which involves dividing the network of nodes into numerous shards or channels. The overhead of repetitive communication, storage, and processing at each node is decreased by this technique. This paper explores various sharding approaches to solve performance issues regarding blockchain. We review recent sharding technologies, including Polkadot, Ethereum Casper, and Cardano Hydra. We discuss the performance challenges of blockchains and provide essential insights into the tradeoffs.