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What will be the ultimate scalability solution for Ethereum?

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Key facts:
  • With sidechains you will have to sacrifice something between speed, security, and decentralization.

  • Rollups are not final solutions, but they improve the usability of core networks.

Scalability in Ethereum was the central theme of Patricio Lopez’s presentation at the ETHSantiago 2022 conference series. The founder of Andes Blockchain and former technical project manager at Consensys Solutions LATAM presented the advantages and disadvantages of some of the most widely used scalability solutions for cryptocurrency networks.

One of the main complaints about Ethereum from its users is. How high transaction fees can be at certain times. The cause of these fee increases is the limited ability to Ethereum to cope with a high volume of transactions.

The Chilean developer clarified that. the increase in fees is a network strategy to relieve congestion and, by easing the transaction load, bring commissions back to more affordable prices.

Several solutions for scaling networks such as Ethereum have been proposed for years, and Lopez chose four to illustrate how they work, their pros and cons. It is worth noting that. these are second-tier solutionsthat is, they are not executed directly on Ethereum, but outside of your ledger (blockchain).

Scalability solutions for Ethereum

Payment channels

The second-level scalability solutions for Ethereum are first and foremost payment channels. Lopez acknowledged that this is a technology originally designed for Bitcoin, known as the Lightning network or Lightning network (LN).

Pay-channel technology consists of. A network over which person-to-person transfers are made and which is capable of summarizing several operations, performed outside the main chain, into a single operation within it.

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Payment channels have in their favor the fact that they are fast, almost immediate, and their efficiency is already demonstrated through the Lightning network of Bitcoin. However, according to López, the downside of this technology is that its use is limited to making payments and it is necessary to be online to accept a transfer. On the other hand, freezing liquidity can also be disadvantageous, as it is necessary to leave the funds in charge of the smart contract as long as the payment channel is open.

Ethereum already has a payment channel network known as Raiden. In May of this year, CryptoNews reported that Raiden would work together with Ethereum’s rollup, Arbitrum, with the aim of lower costs Than the opening of paid channels.

Side chains

Sidechains, as the name suggests, are blockchains that run parallel to a main chain. They have bridges that communicate with the main network to send and receive transactions.

The advantages of sidechains include their speed, versatility (they can be used to send payments, issue NFTs, and so on), and they are fully compatible with the Ethereum main chain.

Sidechains, like everything else, also have disadvantages. They tend to be less secure and more centralized, as they they have a small number of nodes to validate their transactions.. This also offers less guarantee of permanence over time. In addition, there is the risk of bridges, which are often a target for hackers.

Sidechains, such as Gnosis’s, use a bridge that allows them to transact between themselves and the main chain (Ethereum). Source: ETHSantiago 2022.

For example, this year saw one of the most expensive attacks in the history of blockchain, the Ronin network bridge. CryptoNews covered the event, in which more than 170,000 PF were mined.equivalent to about $600 million at the time.

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Rollups

Lopez mentioned two types of Ethereum rollups, Optimistic rollups and ZK rollups.. In both cases, the goal is to keep data processing and storage off the main chain. They also share the responsibility of delegating to a smart contract the responsibility of reflecting back to the main chain everything that happens on the chain managed by these rollups.

The difference between optimistic rollups and ZK rollups lies in the smart contract status updates. In the case of optimistic rollups, a time limit is given to prove that the change made by a user is not fraudulent. Meanwhile, in ZK rollups, cryptographic proof must be presented to the smart contract to make a state change, be it the transfer of some stablecoin or token.

Ethereum rollups have in their favor the fact that they are inexpensive to manage and transactions occur quickly. The use of rollups is contrary to the fact that their implementation involves a rather complex level of cryptography. which Patricio López himself confessed to having difficulty understanding. Also, they could be programmed in languages other than Solidity, Ethereum’s native programming language, so they would not be compatible.

To conclude his presentation, Lopez urged projects interested in using any of these solutions to scalability to evaluate the features they need and choose the best one to meet those requirements.

Scalability will remain an ongoing quest in the development of cryptocurrency networks. Source: ETHSantiago 2022.

The developer concluded that none of the solutions presented are definitive and made an analogy stating that it does not matter whether a highway has two, four, six, or more channels or lanes, there will always be some circumstance where congestion will occur.. Therefore, scalability will remain a goal for cryptocurrency and blockchain developers to pursue.

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