There are a whole lot of trilemmas out there.
We've all struggled with the classic student trilemma, balancing good grades with social life, and sleep.
But now we've grown up, we now face a new trilemma — the blockchain trilemma.
What Is the Blockchain Trilemma?
The blockchain trilemma, also known as the scalability trilemma, describes the constant trade-off between scalability, decentralization, and security. When developing blockchain technology, this is a battle you will constantly have to fight.
Why Can't We Just Have All Three?
We can!
However, it’s hard to have all three to the nth degree. When trying to maximize scalability, for example, we may have to reduce decentralization a little. Or in order to increase security, we might have to reduce the scalability. It's a constant challenge that developers face, one that they must be aware of the consequences.
What Is the Origin of the Blockchain Trilemma?
The term blockchain trilemma (the scalability trilemma at the time), was originally coined by the co-founder of Ethereum, Vitalik Buterin, on a GitHub post sometime before 2018 — the post has since been deleted.
In the post, Vitalik references CAP theorem, a computer science theory on distributed consensus which states that if a network failure occurs, you can’t have both consistency and availability. Many have pointed to this similar theory as the inspiration for the blockchain trilemma, as well as evidence that all three (of scalability, decentralization, and security) cannot be obtained.
That being said, Vitalik Buterin rejects this idea. He replied to a Twitter user saying, "the [Blockchain] Trilemma was never an impossibility result, it was claiming that getting 3 of 3 is hard."
The Ethereum upgrade to proof-of-stake is a direct response to this trilemma. Attempting to simultaneously improve the network's scalability, decentralization, and security — all while improving its sustainability.
Why Does Proof-Of-Stake Help Solve the Blockchain Trilemma?
Proof-of-stake is the consensus mechanism that cryptocurrencies like Cardano and Solana use. Instead of mining blocks and solving cryptographic puzzles, it asks network participants to stake coins and forge blocks.
We have covered consensus mechanisms in more detail here.
Let's take a closer look at each corner of the trilemma and explain why proof-of-stake improves each one of them.
Scalability
Proof-of-stake decreases transaction times which, in turn, improves the blockchain's scalability. Ethereum can currently process only 30 transactions per second, while the update to proof-of-stake will increase that to 100,000 transactions per second.
As we all know by now, proof-of-stake uses less computer power, which is better for the environment. It just happens to also improve its scalability. A proof-of-work network may struggle to run the world's entire financial system purely because they'd struggle to have enough resources to run the network.
Decentralization
The barriers for entry to participate in securing a proof-of-stake network are much lower.
In order to be a miner, you must dedicate a lot of computer power. This costs money, time, and energy. Being a validator is much more accessible for the everyday man.
This means that more people can help secure the network. For every new validator joining the network, the blockchain is becoming less centralized than it ever was.
Security
The most common form of attack on a blockchain is the 51% attack. This is where someone gains control of 51% of the network through miners or validators. Due to being more decentralized, the 51% attack is harder to obtain.
Proof-of-stake also requires you to lock up funds in order to validate blocks. This means that if you are a bad actor, your locked up funds will be taken away. This makes bad actors less likely to act, as it won’t be financially viable.
Simple Solutions Which Involve Sacrifice
The nature of this trilemma means that, sometimes, there must be sacrifices. Let's take a quick look at some easy fixes to maximize each of the three factors while sacrificing in other areas.
Maximizing Scalability
It's simple, just buy a lot of supercomputers and let them be the super nodes that secure your network. The issue with this is that you’ll be dramatically hurting your decentralization.
At some point, you just become a company hosting a financial server, rather than a crypto project. Decentralization is key to the blockchain ethos.
Maximizing Decentralization
To maximize decentralization, how about we lower the barrier for entry even more than proof-of-stake. Let's remove the need for any sort of deposit or locked up funds.
As we've already mentioned, this is a key factor in making the proof-of-stake consensus mechanism secure. Removing this will increase decentralization to unprecedented heights in sacrifice for an insecure network.
Maximizing Security
If we pay a group of trusted individuals to personally say yes or no to every transaction, we won't have to worry about a hack.
Unfortunately, we'll be sacrificing both scalability and decentralization if we do so.
Why Sharding Is So Great
In April 2021, Vitalik posted on his blog explaining why "sharding" is a great way to address the blockchain trilemma — calling it the "future of Ethereum scalability''.
Sharding splits blockchain data into smaller, more easily managed shards, making transactions easier to process. Think about eating a cake, it's much easier to eat it once it's cut into slices and handed out to other people.
We've briefly covered sharding in the past in reference to Layer 1 scaling.
Vitalik suggested that a sharded blockchain improves all three factors in the blockchain trilemma.
It improves scalability, as it helps process more transactions. Decentralization, because it reduces the need for supernodes; instead, regular laptops will suffice. Finally, the blockchain will be more secure as "an attacker can't target a small part of the system with a small amount of resources; they can only try to dominate and attack the whole thing".
The Ethereum team aims to implement sharding after The Merge. This is predicted to be sometime in 2023.
Conclusion
Unfortunately, there’s no easy answer to point to and easily fix the blockchain trilemma. Instead, developers must think on both the macro (e.g. moving to proof-of-stake) and micro level to make incremental changes in order to improve all areas.
We've only covered a few methods to address the blockchain trilemma. It’s an everyday struggle for those building blockchain technology. Developers are constantly crafting new ways to evolve their network, be it by changing the consensus mechanism, or simply upgrading the block size.
The blockchain trilemma is an issue that remains to be solved. To all blockchain developers, good luck.
This article is a part of the Hashnode Web3 blog, where a team of curated writers are bringing out new resources to help you discover the universe of web3. Check us out for more on NFTs, DAOs, blockchains, and the decentralized future.