Even as blockchain’s reach continues to expand, the technology remains held back by limitations that are largely the result of its creation. Despite its immense potential for decentralization and disintermediation of many services and systems, blockchain solutions remain largely theoretical due to both technical and cost-related restrictions. The problem for most cryptocurrency and blockchain-based applications is that decentralized networks, while reducing the hardware costs for companies developing them, increase the cost of maintenance. Furthermore, scaling is significantly harder due to the intense resource needs of hosting an ever-expanding distributed ledger on every node.
The sector has taken heed, however, and while many applications are focused on providing solutions for mature industries, others have looked inward instead. These projects are being built to help provide an infrastructure that will allow blockchain to scale to meet increasing demand, a factor that is crucial for spreading the technology to wider audiences and finally reaching critical mass. These five applications are some of the more intriguing scalability projects to watch for as the second half of 2018 comes to a close.
Plasma – Upgrading Ethereum’s Scaling Capacity
Ethereum was introduced to much fanfare, as it set the stage for the development of decentralized applications (dApps) and offered, in theory, a more stable version of bitcoin’s restrictive blockchain and consensus methods. However, the Ethereum chain has also run into scalability issues (which came to the surface thanks to the “CryptoKitties” fiasco), a problem even Vitalik Buterin has admitted exists. One of the solutions he has come up with, however, could be a game-changer for the Ethereum blockchain’s overall scalability.
Plasma is a technology that allows users to create “child” blockchains which branch off from the main Ethereum chain. This removes much of the stress that currently congests the rate of transactions on Ethereum. The biggest problem for scaling is that as the demand for transactions increases when more users join the chain, the costs (resource and financial) of maintaining the chain also grow exponentially.
By allowing users to create micro-chains that host specific transactions, Plasma can remove a large source of strain on the network while concurrently making it easier to scale Ethereum for greater real-world applications. Plasma is being designed to stack on top of Ethereum and work alongside other new technologies (such as sharding) that also work to improve scaling.
Most importantly, Plasma is front and center for Ethereum’s “Phase Two”, which has been touted by both Buterin and Joseph Lubin (another Ethereum co-founder). Some updates were released early in 2018, but the Ethereum team has been more forthcoming about developments heading into the last quarter of the year. Notably, Plasma appears to be as crucial as sharding to the sustained viability of the Ethereum chain. Phase Two of Ethereum will be rolled out in early 2019 and at least three Plasma-related projects are slated to release over the near future. Accordingly, Plasma could emerge as a central technology for the industry by 2019 thanks to its innovative mechanism for dealing with transactional backlogs.
EOS – Expanding Blockchain for Enterprise
EOS.io has already been hailed for its scalable ecosystem for dApp development, its creative design, and its disconnect from the major bitcoin and Ethereum chains. Instead of building a blockchain on which applications can be launched and hosted, the EOS.io team built something more akin to an operating system which lets users piece together their own dApps and blockchains using a system-wide universal template. The beauty of it is that the technology that underpins it is built specifically to deal with the biggest issues limiting scalability—transaction speeds and the number of transactions the system can process.
Bitcoin is notorious for its slow processing times and high fees, which stem largely from the restrictive 1MB size of its blocks. Even Ethereum, the most popular dApp development infrastructure faces its own scaling issues. To wit, the bitcoin blockchain can manage roughly 7 transactions per second, with Ethereum only marginally better at 20 transactions per second. EOS claims to have the capacity to process nearly 50,000 transactions per second (nearly twice as many as VISA).
EOS uses a few different tools that make it significantly lighter than Ethereum and easier to scale. For one, it employs a delegated proof of stake consensus (DPoS) which reduces the time it takes to verify transactions, making it simpler to process more transactions in substantially less time.
One of the more intriguing features it delivers is parallel processing, which means dApps can operate simultaneously without fighting for the same resources. This is possible because EOS allows for both vertical scaling (adding more processing power) and horizontal scaling (adding more machines to the resource pool).
EOSIO 1.0 was officially launched as the end of the company’s phase 3 in late July and has already experienced success. However, phase 4, which will cover the rest of 2018 and the beginning of 2019, will add some of the key features touted from the outset.
The last quarter of the year should see the EOSIO blockchain optimized for parallel execution, which will go a long way towards resolving the bottleneck issue, while phase 5, which is yet to be given an official timeline, will feature cluster implementations. Moreover, some companies are already working on delivering major solutions using the infrastructure, such as EOS PRO’s public enterprise blockchain solution. With a release date set for the fourth quarter, a successful launch could point to a significant source of momentum for EOS, potentially inspiring even more rapid development.
Zilliqa – Improving Throughput for Scalable dApp Development
One of the more exciting developments in today’s blockchain field is the introduction of “sharding” as a possible solution to the scaling hurdle. Sharding involves breaking down large sets of data into smaller “shards” that can be processed independently and then regrouped to form the original set when needed. Initially conceived for the Ethereum blockchain, the model is still at least a few years away from full implementation. However, Zilliqa has taken the lead on that front and already released a version of its infrastructure that has shown tremendous potential for scalability and dApp development.
Zilliqa offers developers significantly higher throughput thanks to its hybrid consensus mechanism, which is based heavily on sharding to both reduce strain on the existing blockchain and theoretically add more speed as more nodes connect to the network. In practice, Zilliqa shards the data workload for every 600 nodes that join. This means that unlike Ethereum or bitcoin, which are bogged down significantly as more nodes join their networks, Zilliqa’s ecosystem speeds up exponentially.
In tests, Zilliqa can process over 1,200 transactions per second with a network of 1,800 nodes, a number that more than doubles when the number of nodes doubles. Even in testing, and with significantly less processing power, Zilliqa’s testnet easily outstrips the biggest legacy blockchains.
However, the most important date for Zilliqa’s actual triumph still looms large on the horizon. The company already reached unicorn status earlier in 2018 thanks to its successful proof-of-concept, leading up to the launch of their mainnet product by the fourth quarter. Moreover, the company plans to release its anchor dApp in the fourth quarter as well, helping to harness faster development times while spearheading a greater push to build a thriving ecosystem. The company’s ZIL token is already ranked 24 in terms of market capitalization, and a successful mainnet launch should push that value even higher. Simultaneously, it can prove that sharding is a viable solution for blockchain’s scaling and throughput problems.
Aion – Improving Cross-Chain Communication and Transaction Capacity
Despite their vast potential, the many disparate blockchains that are constantly being built and launched create a unique problem for scalability. While they’re meant to provide greater freedom and decentralization, they add to market fragmentation and form smaller silos that limit real growth. To date, there have been just a few solutions designed to offer real communication between them. Aion is a multi-tier blockchain solution that claims to be able to improve cross-chain communication while delivering a substantially easier strategy for scaling and developing faster blockchain solutions.
Originally founded in 2017, the Aion team has released a road map that would have them ready to deploy their initial version by the end of 2018, and it offers some intriguing features. Perhaps the most interesting is the ability for developers to create both private and public chains that branch off the project’s proprietary AION-1 chain. These chains can structure their own governance and are fully customizable. Most importantly, built-in interoperability means that this chain can easily communicate with the Ethereum chain without having to reside on-chain.
This allows blockchains to scale more easily, as they are not reliant on the shared processing power of a single chain (like most applications built on Ethereum), though they can take advantage of the legacy chain’s many benefits. Unlike Ethereum, however, the AION-1 chain is built specifically as a foundation that does not store all the individual transactions of each chain. This makes it comparably lightweight.
Though its community remains relatively smaller than other big name projects, it’s gathered impressive momentum with a market capitalization that has already surpassed $120 million. With the core of its phase one (“Kilimanjaro”) completed, which included creating their basic APIs and core framework, the company is set to implement its Phase two (“Denali”) solutions by the end of the year. This includes migrating the FastVM virtual machine and completing its proprietary Aion Virtual Machine. More importantly, it will finalize the development of its Proof of Intelligence (PoI) consensus mechanism.
PoI represents one of the more intriguing consensus mechanisms being developed and could redefine machine learning on blockchain by significantly expanding neural networks and increasing AI efficiency. This mechanism works similarly to Proof of Work, but it requires miners to train neural networks to solve hashing problems.
More than a standard consensus mechanism, Aion hopes PoI will be used as a launchpad for more advanced AI and machine learning solutions thanks to the incorporation of better problem-solving tools. With a full ecosystem that includes scripting languages, a dedicated virtual machine, and PoI, the end of 2018 will reveal much about how Aion’s blockchain solution will operate.
QuarkChain – Maximizing Transactions Per Second
Transactions Per Second (TPS) has become an important metric in the blockchain scalability conversation, and few companies have stepped up to make as bold a claim as QuarkChain. The company estimates that once fully operational, its proprietary network should be able to scale up to a whopping 1 million transactions per second, a capability that is several orders of magnitude higher than bitcoin and Ethereum, and even above Visa’s capacity for approximately 65,000 TPS.
The key for QuarkChain lies in its two-layer solution, which creates one blockchain for sharding purposes and handling the verification of transactions, and a root chain that confirms the processed blocks from shards before appending them to the chain. The company has spent the first months of 2018 developing a private testnet and core wallet products that have reportedly already managed to support up to 2,000 transactions per second. Nonetheless, these figures should be viewed with some degree of caution when considering the numbers have not been officially verified by independent observers and auditors.
QuarkChain’s sharding mechanism, which has been checked by outside sources, has been lauded as an innovative take on shards. Instead of simply creating a side chain to handle the sharding, QuarkChain creates fully parallel chains that operate in isolation at the same time, meaning speeds are rarely sacrificed and the network can balance transaction loads significantly faster.
The company is still focused on completing its core functionality, but the fourth quarter should see significant progress. With the first launch of the company’s mainnet 1.0 alongside QuarkChain Core and its proprietary wallet (which allows for a single wallet to collect tokens from every separate shard), the company’s claims of super-high TPS will be put to the test.
While the 1 million figure is still a distant target, it will be interesting to see how the company can scale from the current levels of roughly 2,000 TPS (alleged) to their next stated goal of 100,000 TPS. If QuarkChain can hit that 100,000 metric, it will mark the single greatest leap in blockchain scalability since Ethereum was launched.
These projects are far from the only ones working to create a better and more viable blockchain ecosystem, but they are some of the more promising solutions. As companies gradually tackle this challenge, blockchain technology will face a much easier road towards mass adoption and put the true disruptive potential on display.