What Are Scaling Solutions? How Do They Make Ethereum Faster?

• Scaling solutions allow Ethereum to process transactions faster
• There are mainly 2 types of scaling solutions on the chain and off-chain.

What are the Scaling Solutions?

As a blockchain grows, the market cap of the blockchain also increases, and as the market cap increases, the transaction volume increases proportionally. What if the blockchain, which has a high number of transactions and a huge market, is not able to process transactions fluently because of low transaction speed and capacity? In such circumstances, we need scaling solutions that will support large no. of transactions and allow the blockchain to function properly.

The main goal of scaling is to increase transaction speed. So that the people performing transactions don’t need to wait for a longer time. In the case of Ethereum, scaling will also significantly reduce transaction fees because Ethereum follows a unique mechanism for processing transactions. 

This mechanism processes those transactions first that pay the maximum transaction fees. Since there is a lot of congestion on the Ethereum network. Ethereum traders end up paying high transaction fees to process their transactions faster. In this article, we will learn about various scaling solutions for Ethereum.

Types of Scaling Solutions

Scaling solutions are of two types: layer1 and layer2. Layer1 scaling solutions are those which are directly applied on the blockchain by making changes to the Ethereum mainnet. While layer2 scaling solutions are those which provide support to the blockchain by operating parallel to the blockchain and processing or verifying transactions. Layer2 blockchains never make any changes to the blockchains’ mainnet.

Sharding

This solution for scaling will significantly scale Ethereum, but it has not been implemented yet. Implementing this solution is a tedious process, as this will introduce changes to the Ethereum mainnet. But it will also significantly increase the transaction speed of Ethereum from 15-100,000 transactions per second. It will split the Ethereum blockchain into 63+ chains, which will not only reduce the transaction fees but will also increase the transaction speed. It is a permanent scaling solution for Ethereum. The Ethereum network will implement it in the future.

Off-Chain Scaling Solution

These scaling solutions do not make changes to the mainnet but process transactions separately from the mainnet and then add them to the mainnet. By rolling up the transactions. This means bundling a lot of transactions into a single transaction. They use various methods to increase the transaction speed of the network. But this is required to be done without compromising the scalability and decentralisation of the network.

Rollups

Rollups perform transactions outside the network and then post data to the layer where the consensus is reached. This process does not affect the security of the network, as it is secured by the native Ethereum security. They are called rollups because they add many transactions into one transaction on the Ethereum by rolling up means of bundling transactions.

• Optimistic rollups: These rollups assume that the transactions are valid by default. They run a computation that is fraud-proof.

• Zero-Knowledge rollups: These rollups are called off-chain rollups because they perform computation off the chain and then submit the validity proof to the chain.

State Channels

This allows users to process transactions off the chain while avoiding network congestion, high fees, and transaction delays. The channels that are currently used are the state channel and the payment channel. The final transaction is then submitted to the Ethereum mainnet.

Sidechain

This chain runs in parallel to the mainnet. These are EVM-compatible blockchains. They validate transactions apart from the blockchain and then add them to the mainnet. 

Conclusion

Scaling solutions are crucial for enhancing the efficiency of the Ethereum blockchain. Layer1 solutions like sharding offer permanent scaling by making changes to the mainnet, while layer2 solutions like rollups and state channels process transactions off-chain, optimising transaction speed and reducing fees without compromising network security.