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What is sharding and why Polygon co-founder says it may not scale Ethereum enough?

What is sharding and why Polygon co-founder says it may not scale Ethereum enough?

What is sharding and why Polygon co-founder says it may not scale Ethereum enough?
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By CNBCTV18.com Jan 5, 2022 5:20 PM IST (Updated)

Ethereum 2.0 will feature the creation of 64 new chains called shards, each of which will run parallelly to the Beacon Chain. Expanding the size of the current database on the main chain will mean access to data would require extremely powerful computers. This, in turn, will propel hardware costs.

The scalability of the Ethereum blockchain has long plagued the decentralised finance (DeFi) industry. Its biggest drawback has been its Proof-of-Work (PoW) consensus mechanism, which identifies transaction validators on the network.

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The PoW mechanism was the first consensus mechanism in the world of cryptocurrencies. It was developed by the creator(s) of the bitcoin blockchain. It requires blockchain users to devote stupendous amounts of computing power to run complex mathematical calculations that decrypt transaction data for validation. This inevitably consumes massive gas fees and requires heavy investments in hardware.
This prevented Ethereum from adding more processing power to its blockchain. It is now transitioning from the PoW to the eco-friendly Proof-of-Stake (PoS) mechanism to solve the issue. This protocol only requires users to pledge their cryptocurrency to the blockchain, qualifying them to become transaction authenticators.
Through the transition, the Ethereum blockchain also aims to fix transaction processing speed that is extremely low at around 13 transactions per second (TPS). Low speed defeats the purpose of running smart contracts or contracts that automatically trigger based on certain pre-defined conditions.
How do Ethereum developers aim to resolve this issue?
To facilitate the upgrade from PoW (Ethereum 1.0) to PoS consensus mechanism, Ethereum developers rolled out Beacon Chain in December 2020. This is the main chain of the Ethereum 2.0 blockchain and incorporates the PoS structure with the native cryptocurrency ETH2.
The Beacon Chain has existed independently from Ethereum 1.0 blockchain and will eventually be merged into the mainnet soon. The merging will mark the end of the PoW era for Ethereum and usher in the PoS framework of operations. According to the official website, this is the precursor to the rollout of shard chains, which is expected sometime in 2023.
But, what exactly is sharding?
The underlying philosophy of 'sharding' is to distribute the processing load of the main chain horizontally and thus decongest it. But how?
Ethereum 2.0 will feature the creation of 64 new chains called shards, each of which will run parallelly to the Beacon Chain.
How will this help? Expanding the size of the current database on the main chain will mean access to data would require extremely powerful computers. This, in turn, will propel hardware costs. Network validators would not be able to sustain mining operations in this case.
With sharding, validators on the blockchain will only need to access the data being processed on shard chain and not the entire main chain. This will cut the gas fees significantly. It will also commensurately reduce required computing power, thus providing relief to transaction validators.
Since this will enable mining on devices like personal computers meant for day-to-day use, it will enhance user participation in the blockchain. Greater participation means greater decentralisation, which in turn will lead to more robust security protocols. This also improves the network's health as more clients run it on many devices.
Polygon co-founder Sandeep Nailwal during a recent interview with CoinTelegraph said: "Even if 2.0 comes in here, that will not provide enough scalability. Next year, the proof-of-stake upgrade will keep everything the same; like Ethereum has 13 transactions per second
That, he said, does not add anything to scalability. "And let's say in three to five years, even if sharding comes, we'll have a projection of 64 shards. And with each acting at 20 transactions per second, but that's still 1,280 transactions per second overall, right? That's still not enough for the entire world," he said.
How is Polygon different?
Network congestion means decentralised apps executing decisions made by smart contracts cannot run smoothly. This impedes processing speed, and in turn, hampers scalability.
The Polygon network takes a slightly different approach than Ethereum 2.0 network. Polygon offers a layer-2 solution atop the Ethereum blockchain. This translates into greater ease of coding new side chains that can be added with equal effortlessness on the network.
This is like a network of local roads. When the highway is packed with traffic, service roads that lead the vehicles away from the jam onto alternate paths are added to the road network.
Polygon can also be deployed as a layer-2 solution on any blockchain as it focuses on making the deployment of new chains more conducive and simplified.
Polygon averages a processing time of just 2.3 seconds per transaction. Ethereum takes 15 seconds to do the same and consumes far more power. The Polygon network can achieve an overall network speed of 10,000 TPS, a number that currently remains unbeaten.
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