The blockchain trilemma: Can it ever be tackled?

Blockchains indispensable equilibrium betwixt offering the champion unafraid and scalable infrastructure portion inactive staying reasonably decentralized. Is this a realistic future for Web3? 

A cardinal gathering artifact for blockchains is decentralization, a functionality that enables radical to transact without the request of a cardinal authority. This formed the crux of the Bitcoin (BTC) achromatic insubstantial that Satoshi Nakamoto published successful 2008. It serves arsenic the basal for immoderate Web3 merchandise from a web and ethos vantage. 

However, arsenic much radical flocked the chain, a mates of different functionalities seemed crucial, scalability and security. While Bitcoin is considered the astir decentralized of each networks, its transaction velocity does not marque it conducive for gathering applications connected apical of it and this is what different layer-1 chains capitalize connected and strive to solve. 

While the creators and developers of L1 networks assertion astir them being the astir secure, astir scalable and astir decentralized web of all, is that the case? Can blockchain networks beryllium created with adjacent accent connected decentralization, scalability and security? 

If yes, past the blockchain trilemma volition cease to exist. But, sadly, that is not the lawsuit and astir each L1 networks neglect to cater to each 3 aspects, leaving the doorway unfastened for a pioneer to lick blockchain’s biggest challenge, albeit the biggest wealth spinner. 

Let america look astatine 3 apical L1 networks, Bitcoin, Ethereum and Solana and measure them crossed the 3 dimensions namely,  decentralization, scalability and security.

Studying the priorities of Bitcoin, Ethereum and Solana volition assistance shed airy connected however these priorities impact the properties of a blockchain. Decentralization is the quality of a blockchain web to administer governance done its statement mechanisms.

Architecture is astir knowing wherever to marque the compromise. That is precisely the lawsuit erstwhile it comes to each of the L1 chains successful information and successful assessing however they person addressed the blockchain trilemma.

True to its ethos, Bitcoin remains the astir decentralized of each L1 chains owed to its adherence to proof-of-work (PoW) and a deficiency of cardinal authorization controlling the improvement and governance ensures this. While Ethereum and Solana assertion to beryllium decentralized, are they arsenic decentralized arsenic Bitcoin? The reply is astir apt not.

Solana’s token allocation is heavy centralized, with task capitalists, developers and Solana Labs owning adjacent to fractional of the money allocated. This has drawn disapproval from galore Web3 evangelists and thought leaders astir Solana trudging distant from the ethos of Web3. It has besides been affected by the FTX illness much than Bitcoin and Ethereum due to the fact that of the token allocation.

Comparatively, Ethereum arsenic a web is much decentralized than Solana. However, it inactive lacks Bitcoin’s decentralization advantage. Ethereum besides has respective vectors of centralization similar unreality infrastructure, maximum extractable worth (MEV) and the proof-of-stake (PoS) statement mechanism.

Blockchain networks indispensable standard seamlessly to beryllium capable to service real-world usage cases similar payments and micro-transactions. Can decentralization and scalability co-exist?

Web3 is inactive astatine a nascent stage. For it to summation prominence and spot wide adoption, it has to beryllium disposable to the masses. Hence, scalability is simply a paramount origin and for a web to scale, it requires transactions to beryllium completed swiftly and determination lies the occupation for Bitcoin. 

Despite being the astir decentralized and unafraid blockchain, scalability plagues the pioneer of blockchain technology. Its debased throughput ensures its inability to beryllium disposable to the masses, which is the crushed we bash not spot galore decentralized applications connected the web arsenic idiosyncratic acquisition goes for a toss. 

Comparatively, Ethereum and Solana are overmuch much scalable owing to higher transaction speeds and throughput. While Ethereum uses PoS to execute scalability, Solana uses impervious of history. Both of these statement mechanisms alteration much throughput, however, but Solana is much scalable owing to its velocity and debased outgo of transaction. Yet, Solana’s architectural decisions unfastened them up to different risks which are addressed successful the adjacent section.

Over $2.1 cardinal got stolen successful 2021 wrong Web3 by hackers. How tin blockchain networks guarantee information portion inactive remaining scalable and decentralized?

Where determination is money, determination is simply a hazard to information and the menace of cyber attacks. In the Web3 world, information is highly important arsenic it is plagued by scams and hacks. Unlike TCP/IP (Transmission Control Protocol/Internet Protocol), the protocol that today’s net works on, blockchain protocol layers store real-world value. Therefore, information breaches tin effect successful monetary losses.

As overmuch arsenic Ethereum and Solana alteration scalability, some of these L1 chains deficiency the information that Bitcoin boasts. Bitcoin’s PoW mechanism, combined with web decentralization, makes it robust from a decentralization and information perspective. Also, gaining power of 51% of the network is easier with Ethereum and Solana arsenic compared to Bitcoin.

The emergence of a caller tier of blockchains called layer-2 chains that person leveraged caller cryptographic techniques similar zero-knowledge-proofs (ZKPs) has helped code the scalability enigma.

While the satellite was engaged solving the blockchain trilemma astatine the L1 level, determination were a clump of astute developers who understood that optimization request not needfully hap astatine the L1 level. One tin make a web connected apical of L1 networks to lick cardinal problems. 

There are a fewer L2 networks, specified arsenic Polygon, Immutable and the Bitcoin lightning network, which usage concepts specified arsenic sharding and rollups to lick for scalability. They are capable to support information intact arsenic the L2 chains execute transactions and L1 chains stay applicable for the colony of transactions. 

While determination are aggregate networks that are starting to look astatine the L1 and L2 tiers and a fewer beforehand runners astatine each tier from a marketplace capitalization perspective, nary person wholly solved the blockchain trilemma. The web ecosystem that solves it volition beryllium poised to regularisation the aboriginal of superior markets and the internet.