Explained: Sharding for Blockchain Scalability

While several blockchain providers struggle with issues of massive transactional power and scalability, sharding can be the answer.

Shardeum is a blockchain platform currently under development. According to the company, the smart contract platform will feature “infinite scalability, true decentralisation, and solid security.” Capable of onboarding a billion people and becoming the core infrastructure for Web 3.0, Shardeum challenges other blockchains such as Ethereum and Solana in achieving scalability. What makes them have the upper hand? A concept called sharding. 

Unravelling the fundamental issue

Blockchain technology is leveraged across industries for cross-border financial transactions, supply chain management and sustainability. However, one standard problem is the lack of scalability. 

Blockchain such as bitcoin and Ethereum deploy a proof of work (PoW) consensus mechanism, which involves massive computing power to decrypt transaction data with complex computations. Called a node, the computing systems and its globally scattered network provides required decentralisation to the blockchain and security. The more nodes, the greater the decentralisation and security. But it also clogs the nodes and gives rise to scalability issues. 

With the increasing number of transactions on a blockchain, a backlog of unvalidated blocks begins to formulate, forcing users to wait for a long time for a transaction. Companies are desperately looking for scalability solutions to provide better support to their users.

Moreover, with more computers connecting to peer-to-peer (P2P) networks, the system quality can worsen. The financial industry that leverages blockchain to be a hundred times faster, figuring out a way to increase scalability and address latency problems isn’t easy. Sharding is the answer to it. 

What is sharding?

It is a method to spread the computational and storage workload across the network to decrease the processing overload on every node. Each node serves as a partition information provider through this method

These sub-chains are built over the main blockchain, each acts like a mini-blockchain with its processing power and a set of nodes. The data in each shard can be shared with other nodes, keeping the ledger decentralised and secure. Once the shards examine transaction details, the data is put into “blocks” and added to the blockchain. Every block is linked to the previous one, which cannot be altered.

All shards are interconnected amongst themselves and continuously exchange data. Since data from the main chain is fragmented and distributed among the shards, the blockchain declutters all underlying protocols more efficiently and acts as a decentralised distributed ledger. 

Some users mistake sharding for partitioning. While both want to achieve the same thing, they follow different approaches. Sharding has a perspective that one can find all the data on various computers. Meanwhile, partitioning groups all data of the subsets into a single database. Sharding is the more obvious choice as blockchain usually connects several different computers. 

The sharding concept originated with horizontal database partitioning and was adopted by Ethereum 2.0, NEAR, Polkadot’s Parachain, and Shardeum. More recently, MegaHoot Technologies completed the sharding process of the Pecu Novus blockchain for scalability. It allows the network to process thousands of transactions every second, including NFTs. 

But is this approach free of security risks? A shard can be corrupted, resulting in catastrophic consequences. It does not solve the consensus problem. When a blockchain splits into multiples, not all nodes have to authenticate every transaction. Instead, only nodes on a blockchain shard will have to validate. It means that the entire network is not decentralised.

Hence, some new blockchain platforms prefer to choose the Proof of Stake (PoS) consensus mechanism, where the nodes are only changed to dedicate the blockchain’s cryptocurrency to the network. It reduces the requirement for computing capabilities. For instance, Ethereum is about to make the long-awaited change from PoW to PoS.

Though sharding has its possible drawbacks, it is the most plausible future of the blockchain ecosystem. It offers a win-win situation for businesses and customers — the ability to reduce transaction time and increase customer satisfaction.