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The dawn of blockchain technology has revolutionized the world in ways nobody could have imagined. But while blockchains exhibit an unprecedented potential for technological advancements, they are inhibited by their sluggish transaction rates. Ethereum can currently process up to 15 transactions per second, whereas non-blockchain systems like Visa and MasterCard can potentially process thousands of transactions within the same time frame.
What is sharding on Ethereum?

Sharding is a layer 1 scaling solution. It is planned for implementation on the Ethereum blockchain together with the proof of stake protocol. According to Ethereum’s co-founder Vitalik Buterin, the implementation of sharding could potentially increase Ethereum’s transaction-per-second rate one hundred times, facilitating a much greater network throughput. In addition, sharding is complementary to other scaling solutions like Polygon.

Sharding Essentials

  • Sharding is a layer 1 scaling solution.
  • Sharding splits the blockchain into multiple partitions.
  • Each partition has its own set of validators.
  • According to Vitalik Buterin, sharding could scale Ethereum 100-fold.
  • Sharding is complementary to other scaling solutions, e.g. Polygon .

The architecture of sharding

To understand how sharding will work, we must first understand how proof-of-stake blockchains work in general. Each node stores all states of the network and processes all transactions. Combined together, all nodes keep a common ledger of the transaction history, enforcing their common version onto any node with different data. But the fact that all nodes do everything stalls the network.

If proof of stake were implemented without sharding, new blocks would be added to the blockchain by validators (not miners, as is the case with proof of work). Also called minters, these validators would be responsible for confirming each new block in the blockchain. They would do so by staking a portion of their ether and casting their votes. If they validated a corrupted block, they would lose the ether they had staked once the consensus proved their minting corrupt.

By contrast, if sharding were to accompany the implementation of proof of stake, the story would go a bit differently. Not all validators would validate all blocks. Rather, the blockchain would be split according to the horizontal partitioning principle. This would break the network into smaller groups or pieces. Then, each partition would have its own set of validators in charge of validating the blocks of transactions that occur in that partition.

The primary objective of sharding is to continuously structure a system that ensures data is chunked in small enough units and spread across enough nodes that data operations are not bound by resource constraints.

Put simply, decentralized networks become slower as the number of nodes in the network increases. However, this effect can be toned down – the more sharded a network is, the faster it gets. It should be noted that each shard needs a sufficient number of nodes to ensure an adequate level of security.

Drawbacks of sharding

One of the most notable disadvantages of sharding has to do with network security. Because each blockchain shard or partition is considered a unit in its own right, it can also be attacked in isolation. And because a shard is smaller than the entire network, the effort needed to attack a single shard is much lesser than when attacking the entire network.

Another downside of sharding is the fact that it has a single point of failure. This means that the corruption of one shard, be it due to network, hardware, or system errors, would result in the failure of the entire table of shards. Ethereum’s developers will have to address this issue before implementing their sharding solution.

How will Sharding scale Ethereum?

According to Vitalik Buterin, one of the founders of Ethereum, sharding could potentially scale the Ethereum blockchain 100 times. This means that the current transaction throughput, which amounts to about 15 transactions per second, could be increased to 1,500 transactions per second. This would make it faster than certain global payment protocols, e.g. Paypal.

In theory, sharding could greatly help scale Ethereum. If its implementation  is a success, Ethereum will be on par with the fastest payment protocols in the world, e.g. Visa and MasterCard. This could pave the way for its widespread adoption in the world of monetary transactions.

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