Blockchain Trilemma in Practice

For instance, Solana boasts 1,764 active validator nodes and has relatively stringent hardware requirements for running a validator node. In contrast, Ethereum currently operates with 2,201 active execution clients and 323,264 consensus clients. Efforts are underway to allow full Ethereum node setups to function on compact devices like Raspberry Pi. This indicates that while Solana achieves superior transaction throughput, it is significantly more centralized in terms of validator numbers compared to Ethereum.

Polkadot and Cosmos are also addressing the blockchain trilemma. Rather than relying on a single blockchain for diverse application needs, they focus on creating application-specific blockchains tailored to their unique scenarios.

Ethereum's Scaling Strategies

Ethereum's scalability challenges are evident in the high transaction fees incurred during periods of intense network activity. There are two primary strategies for enhancing Ethereum's scalability: on-chain scaling and off-chain scaling. The former entails modifying the Ethereum protocol, while the latter operates independently of it.

One of the leading methods for on-chain scaling is sharding, which is inspired by database design principles. In this approach, data is horizontally partitioned and stored on various physical machines based on user access patterns. This method facilitates smaller databases tailored to specific user groups while maintaining a unified data model. The benefits include improved availability, faster queries, increased bandwidth, and enhanced workload management due to parallel query processing. Implementing sharding on the Ethereum blockchain could yield similar benefits, with ongoing discussions in the Ethereum community about its adoption.

Off-chain scaling solutions present a more optimistic landscape. Currently, the most widely adopted options include rollups and sidechains. One notable example of a sidechain is the Polygon PoS Chain, developed by Polygon Technology in India. While it aims to bolster Ethereum's scalability, it does not inherit Ethereum's security, as it operates its own validator set. Consequently, this results in a more centralized EVM-compatible blockchain that offers lower transaction fees.

In contrast, rollups maintain the security and decentralization of the Ethereum blockchain. As of May 30, 2022, the leading rollup solutions based on Total Value Locked (TVL) are Arbitrum and Optimism. Additionally, dYdX serves as a rollup solution specifically designed for exchange purposes. Arbitrum and Optimism are categorized as optimistic rollups, while dYdX utilizes zero-knowledge rollups. Both types of rollups work by batching transactions, which are then committed to the Ethereum mainnet from an external source.

Optimistic rollups function on the premise that transactions from an external sequencer are valid by default, only requiring computational proof in cases of suspected fraud. Thus, they must implement a mechanism to submit transactions to the Ethereum mainnet, along with evidence of their accuracy.

Zero-knowledge proofs, on the other hand, entail off-chain computations for transaction batches, utilizing a cryptographic proof called zk-snark, which can be easily verified by the Ethereum blockchain to confirm transaction validity. However, as of May 30, 2022, there are no broadly applicable zk-rollup solutions ready for production.