The Blockchain Trilemma is a particular problem that blockchain technology’s decentralized networks must overcome even as it establishes itself as a new pillar of the global economy. It is a fundamental problem with how a blockchain infrastructure balances decentralization, security, and scalability. PLC Ultima intends to provide more information about the Blockchain trilemma’s solutions.
What Is Blockchain Scalability?
Blockchain scalability refers to a network’s capacity to accommodate growing transaction volumes and node counts. Scalability is important because it is the only way blockchain networks can effectively compete with centralized, older platforms with quick settlement times.
For PLC Ultima, the Blockchain’s capacity must expand in the future and achieve high transactional throughput. A blockchain will have more nodes and thus becomes more redundant and decentralized as the nodes multiply. While this redundancy is excellent for the network’s security, it could improve its performance. The Blockchain Trilemma refers to this discrepancy between security, decentralization, and scalability.
Scaling Solutions: Layer 1 Vs. Layer 2
Fortunately, a brand-new generation of blockchains and scaling solutions have been designed particularly to address this transaction-capacity issue. These solutions are also significantly expanding the scalability potential of Blockchain. Now, new Blockchain-based projects use Layer-1 and Layer-2 scaling techniques to address scalability differently.
Layer 1 Scaling Solutions
A Layer-1 network is referred to as a blockchain. Blockchains at Layer 1 include those for Bitcoin, Litecoin, and Ethereum. Thus scalability is increased by adding layer-1 scaling solutions to the blockchain protocol’s base layer. Layer-1 solutions also increase the amount of data contained in each block and speed up the rate at which blocks are validated to boost total network throughput.
Lately, some improvements have been made to the consensus protocol or Layer-1 solutions. The consensus protocol used on well-known blockchain networks like Bitcoin and Ethereum is known as Proof of Work (PoW). However, despite being safe, PoW was slow and environmentally degrading. Hence, PoS was employed.
Scaling Solutions for Layer 2
The layer-2 network or technology enhances the scalability and efficiency of a blockchain protocol by running on top of it. This class of scaling solutions comprises offloading a portion of the transactional weight of a blockchain protocol to a neighboring system architecture, which then manages the bulk of the network’s processing and only later reports back to the primary Blockchain to finalize its results.
The base layer blockchain becomes less crowded— and therefore more scalable—by abstracting most data processing to auxiliary architecture. For instance, the Lightning Network is a Layer-2 solution designed to increase transaction speeds on the Bitcoin network. Bitcoin is a Layer-1 network. In addition, both layers aim to resolve the underlying issue of the Blockchain by ensuring optimal function of the Blockchain security, scalability, and decentralization.
PLC Ultima explains that while Layer 2 solutions rely on a parallel network to enable transactions outside the mainchain, Layer 1 solutions directly alter the original Blockchain’s regulations. For better understanding, the Bitcoin Blockchain represents Layer 1, and the Polygon network is a nice illustration of a Layer 2 network.