Ethereum is undoubtedly the most widely used blockchain. An ecosystem of platforms, developers, and investors metamorphosing the decentralization world. Decentralization is an essential trait of Ethereum. Is decentralization a boon or a bane?
Ethereum consists of autonomous entities hosting massive amounts of information, decreasing the network’s throughput. Ethereum sharding is the perfect solution for scalability concerns. The blog explains sharding meaning, significance, and dynamics. Let’s dig out more details about Ethereum Sharding.
What is Sharding?
Sharding in big data is splitting the database across multiple machines in a peer-to-peer (P2P) network. In the database sharding example, each portion is called a ‘shard.’ Thus, each node stores only its portion or shard rather than the entire network load. Each shard is independent and has individual account balances and smart contracts.
Despite functioning as independent nodes, each node stores all the shard’s information, thus, creating a centralized and safe ledger. As a result, each node can view the information of shards across the network. Furthermore, sharding in blockchain involves splitting blockchains or huge data tables into smaller manageable chunks called ‘shards.’
The four standard techniques are horizontal sharding, vertical sharding, key-based or hash sharding, and directory sharding.
What does sharding mean in crypto?
In the crypto world, different blockchain companies and projects use sharding. The following are a few sharding blockchain examples:
Ethereum is a dream project to expedite decentralized applications. Moreover, it is a robust platform to host, manage, and expand decentralization applications. Scalability and resources are the two primary requirements for storing and processing massive amounts of data on the Ethereum network. However, Ethereum can only process data on a small scale.
That’s when Ethereum sharding, one of the prominent sharding blockchain projects, enters the scene. Ethereum sharding implements the sharding collectively with layer two rollups by splitting the massive data required for the rollups across the network.
Polkadot is a sharded blockchain network with multiple shards. In the Polkadot context, sharding means the network splits the workload into multiple subchains, known as parachains. And each subchain has its function, purpose and works independently, thus increasing the network’s capacity.
Zilliqa is another example of blockchain that uses sharding. Sharding makes the Zilliqa blockchain more scalable. For example, consider a Zilliqa network with 1,000 nodes. Sharding divides the network into ten shards of 100 nodes each. As a result, the shards can process the transactions in parallel. While each shard processes ten transactions in parallel, they can process 100 transactions per second together. Thus, sharding architecture enables an increase in the performance of the network as it grows.
Where is Ethereum data stored?
Ethereum uses a trie data structure for storing data. Moreover, it stores mining transaction data and permanent data separately. And once the nodes verify the transaction, it makes it into the trie data structure. Furthermore, there are three types of trie data structures:
- State Trie
There is only one state trie in the Ethereum network. It stores temporary data in key and value pairs, such as account addresses.
- Storage Trie
Storage trie holds the contract data, and every Ethereum account has a storage trie.
- Transaction Trie
Every block holds transactions. Hence, every block has an inherent transaction trie. Further, the order of transactions depends on the sequence of their addition and consists of an index. Besides, the order of transactions never changes.
Why is sharding essential?
Every node in the blockchain retains the entire transaction log of the network and processes every transaction. Owing to the independent nodes, blockchains like Bitcoin and Ethereum imbibe the “decentralization” nature of the blockchains.
Moreover, you gauge the blockchain’s throughput with transactions per second. Bitcoin processes 5 TPS and Ethereum about 10 TPS. On the contrary, centralized payment systems such as Paypal and Visa process about 1,500 to 2,000 TPS.
Moreover, sharding is essential for the following reasons:
In the blockchain, each node holds the transaction history of the entire network and processes data. Thus, if malicious actors enter the network, it is difficult for them to modify the existing transactions. However, no blockchain can simultaneously exhibit the three fundamental traits – decentralization, scalability, and security.
Sharding helps to solve the blockchain trilemma to some extent. Sharding ensures the nodes need not retain the entire history of transactions and process each transaction in the network. Therefore, the overall performance of the network increases.
The fundamental advantage of sharding in the blockchain is it upscales the scalability. A blockchain can add additional nodes and house more information with sharding, all without comprising the transaction speed. Thus, several industries leveraging the blockchain, such as the Fintech industry, can benefit from the significant development. Moreover, blockchain can compete with centralized payment systems.
Crypto enthusiasts expect sharding would reduce the amount of hardware for running a node. Reduced computational power and resources imply more accessibility. And you can run a node on even a personal computer or even a mobile phone. As a result, more people can participate and enhance the network.
How Do Sharding Work?
Sharding helps distribute the information on a decentralized network, makes rollups cost-effective, and simplifies the network. Although the sharding architecture appears to be simple, the following are the two fundamental elements of the architecture:
Each node is responsible for performing and managing all the transactions in the network. And these nodes function as autonomous entities responsible for storing and processing the data of the decentralized network. The stored data includes account balances and previous transactions. Above all, the Ethereum founders put forth the condition of autonomous entities while designing the network.
In sharding, each node doesn’t require storing and processing all the transactions in the network. Thus, sharding increases the overall transaction speed and efficiency of the network.
Horizontal Partitioning of databases is another essential element in the Sharding Architecture. Sharding divides the rows into horizontal sections called ‘shards.’ How does segregation happen? The division occurs on certain features of the row. For example, the first shard stores the older transactions, while the second shard stores the recent transactions. Furthermore, shards involve the type of digital assets they store in them.
How will sharding scale Ethereum?
Sharding is an Ethereum scaling solution. As we know, sharding involves splitting the blockchain into smaller chains called shards. These shards process specific transactions rather than maintaining all the transactions in the network. Moreover, a beacon or main chain manages all the interactions between the shards. Thus, sharding reduces the workload of a single blockchain.
Moreover, sharding is a Layer 1 scalability upgrade. And it relatively upscales the Ethereum network compared to a single blockchain network. Although now Ethereum handles around 13 tps, after sharding, the Ethereum sharding tps would be about 100,000. Another critical benefit of sharding is reduced gas fees. What are gas fees? Gas refers to the fees required for processing transactions in the Ethereum network. Moreover, less competition in the network will reduce the Ethereum sharding gas fees.
If you use Ethereum, you know you can integrate smart contracts into something new with ‘plug and play.’ For example, if you have two smart contracts, one for availing a crypto loan and the second one for purchasing a token. So, these two functions are composed of elements for building something new. The process of composing such actions is called Ethereum sharding composability.
Composability is a catalyst for innovation in the Defi world. Will sharding break the composability? The answer is no – scaling the network and preserving its composability is possible.
Blockchains can process only limited transactions in the network due to their decentralized nature. Sharding is a definitive solution for the scalability trilemma. Sharding will further accelerate the Defi applications and create new opportunities, opening avenues for blockchains. The Ethereum sharding roadmap ahead is a part of the Ethereum 2.0 or the serenity upgrade involving three phases. Although we are still determining the Ethereum sharding timeline, reports state sharding will be in early 2023.