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Studying Blockchain Sharding

March 7, 2024

Scalability has been one of the blockchain industry's most influential and long-standing challenges. With the rise in demand for decentralized apps and other DeFi products, finding innovative solutions to this problem has become more crucial than ever. As more and more blockchains become connected to each other, the amount of data transmitted between them grows significantly as well. Such an increase causes network congestion and prolonged execution times, making using cryptocurrencies less efficient and convenient.

Moreover, sustaining an extensive ecosystem of connected blockchains will become progressively more difficult, leading to possible security failures and other defects.

Many developers have been coming up with different technologies and solutions to resolve scalability issues, including sidechains, ZK-based approaches, and sharding. All of these differ in the level of robustness, adaptability, and security and can be beneficial in specific instances. Today, let's delve into the concept of sharding and explore how it operates and differs from other approaches.

Explaining How It Works

Blockchain developers use sharding to improve how their networks cope with increasing volumes of user traffic. This process involves dividing the network into smaller segments called shards, which can operate independently and simultaneously. Shards manage the flow of transactions directed to them with the help of node validators (typically referred to as a committee) dedicated explicitly to each shard. This way, the network's activities can be parallelized, enabling numerous transactions to be processed at the same time. This approach results in quicker execution times, making tackling higher workloads possible without compromising the network's integrity or security. 

Dividing a blockchain network is quite an intricate process. It goes beyond just splitting up the chain, as a strong connection between shards must be established to ensure the network remains unified. It is where another vital component of sharding, called crosslinks or hash links, comes into play. These are references to the state of a shard at a specific point in time. Crosslinks are periodically added to the main chain, ensuring synchronization of each shard's state. This way, even if a shard goes offline or experiences a problem, the rest of the network can continue to operate without any issues. 

Another component securing the unification and integrity of the blockchain is the so-called coordination layer. Once the nodes of a shard chain authenticate a block, it is broadcasted to the coordination layer first to verify its validity. If the block is valid, it is added to its records. If not, it is rejected. This guarantees the consistency and synchronization of the shard chains with each other, thus ensuring the system's security. Additionally, this layer enables cross-shard communication as it provides every shard with the capability to read the data of others.

One of the most prominent examples of using sharding is the Ethereum network. It was integrated during the Ethereum 2.0 upgrade, whose goal was to overcome scalability and sustainability issues that hindered the development of the network. This implementation consisted of the Beacon Chain and shard chains. The Beacon Chain selects validators, manages rewards and penalties, coordinates the shard chains, and ensures that all of them operate in sync. At the same time, all shard chains are able to communicate with each other through the Beacon Chain. 

Advantages of Sharding & Challenges Associated with It

Sharding provides several advantages for blockchains implementing this technique, the first being the scalability boost, extensively discussed above. Another important advantage is linked to scalability - a decrease in delays in the networks' operation. By utilizing parallel processing and simultaneously confirming transactions across different shards, the time required for transaction confirmation can be greatly reduced. As a result, sharding improves the overall speed and responsiveness of the blockchain network, making it more efficient and user-friendly.

The third advantage of sharding is that it optimizes resource usage. By distributing the computational load among multiple shards, this approach makes efficient use of network resources, thus resulting in lower transaction fees and making blockchain technology more accessible to a wider range of users. 

Despite all the advantages, implementing sharding also poses a few challenges that developers must consider carefully. The first is sustaining the chain's decentralization and integrity. In the case of networks employing the sharding technique, nodes are divided between different shards, potentially becoming a network's weak points. Since attackers will need fewer resources to threaten the soundness and fairness of a single shard (compared to trying to take over the whole network), this scalability solution can increase risks connected to centralization, such as collusion or a 51% takeover. It means sharding smaller networks could make them more vulnerable to attacks from hackers targeting validation nodes. Conversely, larger and busier networks are naturally less susceptible to such problems since even a single shard would have an adequate number of validators to ensure decentralization.

Another challenge sharding implementations face is the possibility of data inconsistencies. Since each shard chain operates independently, it may sometimes result in some shards recording data that do not match the data of others, posing significant security risks. Such discrepancies between shards cause the state of the network to become inconsistent and unstable, which can be used by attackers. Therefore, improving communication between different shards and the coordination layer is crucial for sharding development and enhancement.

The last major concern with sharding is the increased risk of system crashes if any single component malfunctions. Because each shard is responsible for a subset of the data or transactions, if one shard goes down or becomes corrupted, affecting the entire system. To mitigate this risk, developers must ensure that secure communication is maintained between shards at all times. A failure to address these challenges can result in data loss, system downtime, or other serious complications.

Final Thoughts

The DeFi industry battles many challenges, and scalability is one of the most prominent. Sharding stands at the forefront of blockchain scalability solutions, offering a path to address the challenges that have hindered the widespread adoption of decentralized products and services. As the blockchain space continues to evolve, sharding has excellent potential to unlock new levels of performance and efficiency. Its successful implementation, as seen in Ethereum 2.0 and other projects, heralds a future where blockchains and solutions can scale seamlessly to meet the needs of a global and decentralized digital economy.

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