Evaluating the blockchain trilemma and its solution

Have you ever been excited about a solution that solves a long-standing problem? Amidst your excitement, you discovered that to use the solution satisfactorily, you needed to make some trade-offs.

The disappointing news is that these trade-offs are essential parts of how this solution solves the problem! Do you have a headache already?

Welcome to the world of the blockchain trilemma, where security, scalability, and decentralization intersect each other to achieve a solution where centralization is defeated.

Introduction

If you are up to date with the latest developments in the tech ecosystem, then you must have heard of or be familiar with Web3, a decentralized web powered by blockchain technology.

This technology has garnered praise over the years as it solves the problem of centralization. Different factors have contributed to its success. However, some core factors cannot be ignored. They include scalability, security, and decentralization.

As fascinating as this decentralized solution may sound, it also has its challenges, and one of them is the blockchain trilemma.

This article will give you a comprehensive understanding of the blockchain trilemma, how it affects the performance of the blockchain, the blockchain scalabity, and the layer 2 solution.

Understanding the Blockchain Trilemma

The core concept of blockchain technology is decentralization through an immutable ledger system, and its main aim is to take control away from a central entity or authority while ensuring security.

The immutable ledger system is achieved through transactional activity occuring in the blockchain network; these transactions represents the exchange of data in the blockchain network. Transactions are recorded to ensure data integrity.

To achieve decentralization through an immutable ledger system, several nodes take part in a blockchain network to reach a consensus through validating and replicating confirmed transactions on every participating node. The consensus mechanism plays a vital role in achieving the security of the blockchain through a technique called Proof of Work (PoW) or another called Proof of Stake (PoS), which requires a high level of intensive computational tasks or large stakes.

Due to the computing power and resources required for these computations in the blockchain network, there are delays and slow validation of transactions that occur in the network, especially when more nodes are involved.

More nodes in the blockchain network can improve decentralization.and adopting high-security techniques, such as complex consensus mechanisms, can improve blockchain security. Yet, these two factors can slow down transaction processing on the blockchain network.

The scenario above, whereby the blockchain achieves peak decentralization or most security, can lead to slower confirmation and validation as transactions increase in the blockchain network; this is a challenge for the blockchain and is popularly known as the blockchain trilemma.

Scalability of the blockchain

The scalability of the blockchain refers to its ability to handle increasing transactions in the blockchain network. As transactions occur in the blockchain network, each transaction is validated through PoW or PoS and replicated on every node participating in the blockchain network.

As explained earlier, PoW or PoS requires intensive computational tasks or large stakes, which take time to achieve, which could lead to slow validation of transactions and even cause network congestion which inevitably lead to higher transaction fees.

The Bitcoin blockchain processes 4.6 TPS (transaction per second), and Ethereum processes around 14.3 TPS. In contrast, one of the largest electronic payment circuits, Visa, processes around 1,736 TPS (peaking at 47,000 TPS). Notice the difference between a centralized and decentralized system?

Scalability is one of the objectives of the blockchain. If this is hard to achieve, this leads to questions of how effective and efficien the blockchain network solves the issue of centralization while considering cost.

In 2022, according to Research Gate, the number of blockchain users continues to increase in parallel over the years as the number of transactions. As the increase in transactions continues, we need scalable blockchain technology that will be decentralized and secured and, at the same time, able to handle increasing transactions.

The Intersection between security, scalability, and decentralization

To achieve scalability and faster transaction validation in the blockchain network, either security or decentralization is sacrificed, and trading off any of them is a limitation of the blockchain.

Trading off decentralization means fewer nodes in the network, which may place more power in the hands of a central authority while security trade-off means using a consensus mechanism that may require less computational power or reducing the level of validation, both of which will make the network more vulnerable to attack.

To solve the scalability issue, there must be a balance among scalability, security and decentralization without trading off any of them. Over the past years, developers have come up with a solution to address this issue. This solution is called layer 2.

The Layer 2 Solution

Layer 2 is a scaling solution built on top of an existing blockchain. It inherits the security and decentralization of an existing blockchain. It can vary from designs to techniques used to scale growing transactions in the blockchain.

Its main goal is to solve the issue of scalability & high transaction fees faced by existing blockchains by moving a significant number of the transactions from the main blockchain network to the layer 2 solution.

The time taken to confirm transactions on layer 2 is short but varies based on the mechanism of the layer 2 solution. While some confirmation is instant, some take time.

Transaction Congestion in the main blockchain often leads to higher transaction fees due to users competing for transaction confirmation, cost is lower in the layer 2 solution because of less competition for transaction confirmation amongst users.

The issue of trade-offs in the main blockchain is addressed by layer 2 solutions by balancing scalability with security and decentralization. This balance is achieved through layer 2’s ability to process and confirm transactions off the main blockchain network, reducing congestion and cost.

Even though transactions occur, are processed, and confirmed in the layer 2 scaling solution, the main blockchain plays a crucial role by ensuring integrity as it is still the base layer for security and decentralization.

Conclusion

Wrapping up, Layer 2 has significantly addressed the issue of blockchain trilemma. However, layer 2 comes in different forms and uses various techniques to achieve scaling transactions.

As blockchain technology advances in research and development, layer 2 scaling solutions will continue to improve and play a significant role in solving the issue of the blockchain trilemma.

As a blockchain user or enthusiast, understanding the blockchain trilemma and how layer 2 scaling solution solves this issue enhances your experience with the blockchain and help you make informed decision while using the blockchain network to solve centralization issue.