Why do we need scalability in Ethereum ?

The main goal of scalability in the Eth is to increase transaction speed , throughput and decrease gas fee without sacrificing decentralization or security.

There are mainly 2 layers in the Ethereum blockchain in order to proceed with the transactions.

The layer 1 of Ethereum blockchain has high demand which leads to slower transactions and non-viable gas prices.

What are scaling solutions?

These solutions would help in achieving the scalability of Ethereum blockchain . The scaling solutions in the Ethereum are mainly divided into 2 types :

1. On -chain scaling
2. Off -chain scaling

What is On-chain(Layer 1) scaling solution?

This is a type of scaling which require changes to the Ethereum main protocol(Layer 1) . As it is the main focus for the scaling which require some major changes. In this type of scaling it uses the process of SHARDING .

Sharding process :-

It is a process of splitting a database horizontally to spread the load . In the Eth context , sharding will reduce network congestion and increases transaction per-sec by creating new chains known as "shards" . In this way the procedure takes place which we can say that has happened recently Ethereum merge.

What is Off-chain(Layer-2) scaling solution ?

It is a type of scaling which takes place on layer 2 that is implemented separately from layer 1 main-net and it require no changes to the existing Eth protocol .

It consists of 2 types of solutions . They are :-

• The first type of solution in Off-chain scaling would derive their security directly from layer 1 . Some of them are Optimistic rollups, Zero-knowledge rollups and state channels .

• The second type of solution in Off-chain scaling would involve in the creation of new chains in various forms that derive their security separately from main net . Some of them are sidechains , validium and plasma chains .

Rollup solutions :-

The rollup's is the first type of solution in off-chain scaling which provides scaling by building or rolling up Sidechain transactions into a single transaction and generating a cryptographic proof also known as Snark which is submitted to the base layer. With roll-ups, all transaction state and transaction execution are handled on the side chain, the base layer store transaction data only .

As the transaction data is included in layer 1 blocks, this allows rollup's to be secured by native Eth security .

There are 2 types of rollup's with different security models :-

1. Optimistic Rollup's :- It assumes that transactions are valid by default and only run computations via fraud proof. They reduce computations on the main net of Eth by processing transactions off-chain by offering significant improvements in processing speed.

2. Zero Knowledge Rollup's :- It processes transactions and performs computations in the off-chain and submits a validity proof by holding assets in an on-chain smart contract.

State Channels :-

It is also first type of solution in off-chain which utilize multi signature contracts to enable participants to transact quickly and freely off-chain ,then settle finality with main net . This will minimize network congestion and fees.

Side chains :-

• It is a second type of solution which is an independent EVM-compatible blockchain. It runs in parallel to main-net which enhances and facilitates data processing from the main chain.

• Contracts deployed to the Ethereum main layer can be directly deployed to the Ethereum side chain.

• These are compatible with Eth via two way bridge and runs on their own chosen rules of consensus and block parameters.

Plasma and Validium chains :-

These are the other solutions of second type off-chain solution.

The plasma chain is a separate blockchain that is anchored to the main Eth chain and uses fraud proofs to arbitrate disputes.

The validium chain uses validity proofs like zero-knowledge rollup's but data is not stored on main net layer 1 . It could lead up to 10k transactions per-sec and can run multiple chains in parallel .

Conclusion:

Finally, We can say that both the solutions have their own merits and demerits which helps in the scalability of blockchain in a better way of utilization where On-chain is considered more as the long-term solution and Off-chain as a short term goal.

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