Zilliqa: A Game-Changer for Blockchain Scalability

What limits scalability of blockchains?
Consensus protocols on existing public blockchains (Ethereum, Bitcoin, Neo, Ripple etc.) have a critical requirement for validation of transactions: every participating node on the network has to validate each transaction sequentially, and then store transactions on the ledger, a copy of which is maintained by each node. This requirement is what imparts, to blockchains, their key characteristic — ‘decentralization’.

However, in such a decentralized system, as the number of transactions on the network increases (with, for example, blockchain adoption), the need for additional nodes, to process and store transactions, also increases. As the number of nodes on the network increases, the data for each transaction has to travel a lot more before being validated and stored by ALL the nodes on the network. Therefore, the network does not scale well as more nodes are added to the network due to the inter-node latency that increases logarithmically with each additional node. In effect, blockchain scalability reduces as the network size increases.

Public blockchain consensus protocols, that operate in this fashion, are forced to choose decentralization over high transaction throughput.

Today, approximately 900 distributed applications (dApps) are built on the Ethereum Network. With a transaction throughput of about 15 transactions-per-second (tx/s), Ethereum is barely capable of handling the current transaction volume, and would have to scale significantly to be able to handle the expected transaction volume in the near future. The Bitcoin network is even worse in terms of transaction throughput, processing only about 4 to 7 tx/s. Similar is the story for all the existing public blockchain platforms, with some being slightly more scalable than others, but all glaring into a future where blockchain transaction throughput could be a severe bottleneck, hindering mass adoption of the blockchain technology.

Researchers from the National University of Singapore (NUS) have founded a blockchain startup called Zilliqa. This new blockchain uses the ‘sharding’ technology, that is set to achieve Visa and MasterCard level transaction throughput of about 4000 tx/s.