Blockchain Scalability: State Channels, Sidechains and More.

October 12, 2021
Tagan Kline

Blockchain is a public ledger used by internet bloggers as means of transaction. It allows participants to transact without the interference of the central government. The ability of a blockchain to scale up to accommodate more transactions is referred to as scalability. One of the weaknesses of blockchain is scalability. The blockchain founder expectation is that as the internet evolves, blockchain should also advance in terms of security and decentralization.


Some endogenous elements, like the block time interval and block size, impact blockchain scalability. Reducing the time improves speed on the surface, but it may also raise the possibility of blockchain splits, lowering security. Another consideration is block size: the larger a block, the more transactions may be contained inside it, resulting in slower network propagation and, as a result, weaker security characteristics. If the settings are changed without thinking, the system might be subject to several assaults, including selfish mining and double-spending.

There are three properties of blockchain:

  1. Decentralization
  2. Security
  3. Scalability

Solutions to improve blockchain scalability

Scalability solutions have two levels; protocol level and second layer level. The solution of both levels should ensure the transaction between decentralization, scalability, and security are balanced.

Off-chain scaling solution.

Off-chain is a technology implemented to enable participants to perform transactions to reduce the risks of bloating. It ensures that the transaction is carried out without appearing on the main chain. Off-chain solutions are mainly based on micropayment channels, and they allow users to avoid on-chain transactions. State channels are convenient in situations where micro-payments are common.

There are two types of off-chain scaling solutions.

State channel

State channel is an off-chain payment channel that allows the transaction to be conducted without the participation of a third party. Moving these encounters of the chain can considerably save costs and speed savings, requiring no extra trust. Scaling blockchain technology to accommodate larger levels of use will need the deployment of state channels.

State channel has three features:

Locking: This ensures the on-chain transaction is secured by a smart contract, which requires parties to agree to the terms and conditions of the agreement. It uses many other authentication mechanisms to ensure the process is not compromised.

Interacting off-chains: the transactions are linear, exactly like on-chain transactions. The most recent interaction overlays previous transactions. Only the most recent state or action is recorded on the blockchain.

Publishing: The state channel shuts and unlocks the smart contract when the operation is completed, utilizing the most recent update as the main transaction. This feature allows quick recovery of transaction copies in case of internet disconnection.

  1. Sidechains

The sidechain is a distinct blockchain from the main chain, but it is not self-dependent because it is linked to it. Both have features that may easily move from one to the other, but their consensus mechanisms, tokens, and levels of security are distinct. Several methods were installed by blockchain founders to ensure that money is transferred across, including depositing assets from the main chain into a unique address or transferring funds to a custodian that swaps the sidechain deposit for cash.

Conclusion

security necessitates a trade-off between trust and scalability. The solutions described above can make transactions expandable without putting a strain on the primary blockchain. Both sidechains and state channel technologies address the shortcomings of transactions. The objective of the blockchain founders is to correctly build up security and trust assumptions while maintaining high-value transactions.

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