TL;DR
- Concerns about blockchain latency and scalability are being addressed by dividing a blockchain network into independent data storage and management systems called "shards."
- Latency is a phenomenon that happens when computers on a network get congested which slows down the transfer of data and information.
- Ethereum uses sharding to address latency and scalability concerns. The Merge created additional 64 new shard chains.
- One of the risks with sharding is a hack or shard takeover where one shard attacks another which leads to data corruption or deletion.
Sharding is used by blockchain networks to increase their scalability and computational efficiency. Sharding happens when a blockchain network is split into shards, dividing it into several smaller networks. Each shard has its own data, and thus, is treated as a separate data store from the others.
Since sharding divides a blockchain network into independent nodes, this speeds up a sluggish network, but on the other hand, there are safety concerns with sharding.
Why do Blockchains Use Sharding?
Supply chain management and financial systems are just some examples of industries where blockchain technology is being utilized. Developments in these industries help drive further adoption of blockchain and cryptocurrencies.
As blockchain gains in popularity, the number of transactions processed and the amount of effort required to process them all increase. Since blockchains are viewed as a distributed database when more and more information is uploaded, the network will need to develop ways to handle it quickly and effectively and sharding is one such method.
Sharding as a Blockchain Scaling Solution
Blockchain technology is appealing because distributed ledger technology facilitates mutual sharing and the general consensus of transactions over a network of computers in different locations. When a transaction is approved and recorded, a copy of the transaction is distributed across a publicly shared network, establishing ‘witnesses’ who can attest to the legitimacy of the transaction.
As a participant in the network, each of these computers stores a copy of the ledger’s transactions, preventing a single point of failure. If a computer or node in the network is compromised, the other participants on the network can identify the altered transaction.
As the network grows and more people participate in the network, this can cause the network to be congested which ultimately causes the network to slow down. When more industries adopt cryptocurrency, scalability becomes an issue since the networks might not be able to manage the additional data and transaction traffic. To put it into perspective, VISA can process 24,000 transactions per second which are massive compared to Ethereum which can only do 30 transactions per second.
Sharding is a practical approach to achieving latency-free scaling of blockchains by spreading a network's burden over several nodes or shards, this can increase the number of transactions being processed by a blockchain and decrease their latency.
How is data stored on the blockchain?
Before exploring how sharding is accomplished within a blockchain network, it's important to review the different ways data is stored and processed.
Blockchain Nodes
All of the network's transactions must be processed or dealt with by each individual node. Each node on the blockchain is autonomous and in charge of updating and storing data for the whole network. This means each node keeps track of things like account balances and past transactions. To ensure the integrity of the network, every node in a blockchain system is required to validate every transaction, process every piece of data, and store every bit of information.
This technique guarantees the security of a blockchain by recording all transactions on every node but significantly delays transaction processing.
Sharding alleviates the burden on a single node by dividing the transactions over several nodes instead of a single node doing all of the chain's processing. Sharding may be thought of as a method of task partitioning.
Partitioning Method
Large organizations use partitioning to separate data into components that may be independently managed and accessed. Partitioning has several advantages, including scalability, reduced contention, and enhanced performance.
For example, when it comes to keeping track of the state and transaction history of an address type, this information could be put on a separate shard. One way to do this is to divide blockchain networks by moving inactive data to a separate, cheaper data storage system.
The horizontal partitioning of the database into rows allows for sharding to take place. The rows, or shards, are represented according to their qualities. Additionally, shards might be separated according to the digital asset type they hold and by using only specific shards, it’s possible to conduct transactions with that specific digital asset.
For example, real estate rental deals can involve multiple shards. These fragments represent various aspects of the transaction, such as the renter's name and the digital keys to a smart lock that are made available once rent is paid.
State Sharding
State sharding is a typical approach to solving scalability problems by enabling nodes to only store a subset of the whole state of the system. With state sharding, it's possible that numerous shards may need to be involved to process a single transaction rather than just one shard.
These kinds of cross-shard transactions have a significant detrimental effect on system performance but using fewer cross-shard transactions can be achieved by grouping the bits of the system state that are visited often during transactions together can improve performance.
Like Harmony blockchain ($ONE), each shard has its own independent database and chains. Since there are N shards, each shard's validators only need to keep track of 1/N of the entire state. The eventual atomicity of cross-shard transactions assures that double spending cannot occur between shards, hence ensuring consistency of state between shards.
Partitioned sharding may be used when it is not feasible for the shards to communicate with each other directly via a central relay. While in state sharding, shards talk to one another without going through the central relay. The issues about the effectiveness of blockchain sharding may be answered by looking at real-world implementations of the technology.
Examples of Blockchain Sharding
You may learn more about the relevance of sharding for the crypto ecosystem as a whole by looking at the three most prominent sharding projects and initiatives:
Ethereum’s Merging
An intriguing feature of Ethereum 2.0 is the Beacon Chain. The Beacon Chain essentially serves as the "master chain" for Ethereum's Casper Proof of Stake technology.
The proof-of-stake consensus mechanism was first implemented on the Ethereum network with the Beacon Chain when Ethereum’s proof-of-work chain is combined with the Beacon Chain in September 2022. Ethereum's current level of security was pioneered by the Beacon Chain, which implemented the consensus mechanism and blocks gossip protocol.
The Beacon Chain has been optimized for mission-critical operations, including the processing of crosslinks and the storing and upkeep of the set of running, queued, and idle validators. It operates in conjunction with the finality device to process the Ethereum network's consensus on a block-by-block basis.
The Beacon Chain is in charge of the Proof of Stake protocol and all of the other shard chains as well, it also provides a governance framework for validators and the stakes in question. In addition, it helps divide up the validators into voting groups and is also in charge of the punishment and incentive structure of the Ethereum network.
Sharding of NEAR Protocol
The goals of this sharding endeavor were to reduce client burden and provide the groundwork for cross-shard transactions to occur in real time. The blockchain is designed so that even the most basic computer may function as a network node.
Since the target is to have basic computers aid in handling some transactions, by sharding the network, NEAR protocol can increase the transaction speed of the blockchain.
While sharding has its advantages, NEAR blockchain has to deal with problems like data availability and authenticity. This means proof of validity for a block is required which must be made public so that any user can validate the block's authenticity. The network's validators are in charge of making the evidence widely available, but without on-chain transmission of the message, this makes verification of the failures in message delivery an uphill task.
Some methods for dealing with these issues are centralized administration and infrastructure.
Polkadot’s Parachain
The next interesting entry among sharding blockchain projects would be Polkadot’s Parachain. "Parachain" basically refers to a simpler iteration of blockchain, which is associated with the security offered by a relay chain. One of the significant features of Parachain is the independent nature of their functions.
In Polkadot’s unique heterogeneous sharding model, each chain in the network can be optimized for a specific use case rather than being forced to adapt to a one-size-fits-all model. The specification of clear boundaries among Parachains helps execute tasks without conflicts, this means there is potential for more chains and more specialization, which open up limitless possibilities for innovation.
Since all blockchains make different tradeoffs to support specific features and use cases, as the Parachain specialization increases, the need to transact between them will also increase over time.
Sharding: The future of blockchain?
Many blockchain projects, coins, and NFTs are built on Ethereum, and pioneering the use of sharding to address latency and scalability concerns, has made Ethereum's blockchain more scalable, which allowed for faster processing and energy savings.
There have been proposals for Bitcoin and other major blockchain systems to abandon Proof-Of-Work after Ethereum’s Merge. But, concerns about security have emerged as one of the most significant problems with sharding as there could be issues with corrupt practices where one shard takes over another shard leading to the loss of information or data. Even if each shard is independent and only processes its own data, this potential danger is not far from reality.
While Proof-Of-Stake is more environmentally friendly than Proof-Of-Work, Bitcoin and other cryptocurrencies under the Proof-Of-Work consensus mechanism remain ideal for reasons other than efficiency. Proof-Of-Work supporters argue that their system allows for more distributed involvement as compared to Proof-Of-Stake.
At the end of the day, there is no “one-size-fits-all” solution with different consensus algorithms and a vast variety of cryptocurrencies. While Cryptocurrencies and blockchain technology solve the varying requirements of transactions and applications, Proof-Of-Work protocols satisfy a demand for a purer type of decentralization, and many supporters believe it is here to stay. Still, it’s highly probable that more blockchains will experiment with sharding to solve their scalability problems in the future.
Disclaimer: The information and publications in this article are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation offered or endorsed by Coins.
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