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What is the blockchain trilemma? The blockchain trilemma is a theorem… | by Sunflower Corporation | Coinmonks | Aug, 2022

The blockchain trilemma is a theorem that formulates the main problem of scaling any distributed network. What does it entail? Who created it? Let’s find it out together!

The theorem states that among the three main characteristics — decentralization, security and performance — the blockchain can only have two.

Eric Brewera scientist, developed the CAP theorem in the 1990s. According to it, a decentralized database (to which the blockchain also belongs) can only have two of the three main properties: consistency, availability, and partition resistance.

As a result, the theorem poses a problem: the creators of a decentralized database must sacrifice one of the three properties in order to achieve the proper level of the other two. This jeopardizes the database’s long-term growth.

The theory was then applied to the blockchain. The Ethereum creator, Vitalik Buterin, popularized the phrase “blockchain trilemma” His project was the first full-fledged platform for developing decentralized applications. Because they assume an infinite growth in the number of users, Ethereum’s bandwidth should increase without sacrificing other important blockchain characteristics.

After Ethereum, many other projects proposed their solutions to the trilemma: EOS, Solana, Cosmos, Polkadot, Near, Avalanche, Everscale, Algorand and others. However, there is no generally accepted approach yet.

Any blockchain has three main properties:

Scalability. The network is able to increase throughput, that is, to process an increasing number of transactions per unit of time.

Decentralization. The network operates without the need for verification by one or more trusted entities. There should be no trust in a node or a group of nodes that cannot be joined using a regular computer.

Safety. The blockchain can withstand an attack by a significant portion of the nodes (ideally, 50% of all nodes in the network, but anything above 25% is a good level).

There are three categories that illustrate this rule in various ways:

  1. Traditional blockchains: Bitcoin, Ethereum or Litecoin. Each of their participants manages a full node that confirms each transaction. Such networks have a high level of security and decentralization, but low bandwidth.
  2. High-speed blockchain: includes networks that use Delegated Proof-of-Stake algorithms They have a small number of nodes (10–100). At the same time, high demands are placed on each of them, such as the need for expensive server equipment or a large number of native coins. These are productive and secure networks, but they lack decentralization.
  3. Multi-chain systems: in which applications are linked to various blockchains, which then interact with one another via cross-chain communication protocols This is a decentralized and scalable network, but it is not secure. After all, in order to “break” the usual structure and cause negative consequences for all other participants, an attacker must take over the majority of nodes in just one blockchain of the system.

Today, we can distinguish two approaches to solving the theorem that will allow us to avoid a forced compromise.

Second-level solutions

These are unusual add-ons “on top” of decentralized networks that extend beyond the boundaries of on-chain activity. The Lightning Network, a network for bitcoin micropayments, is one example.

Classic transfers on the bitcoin network can be expensive and slow, making small-amount transactions economically pointless. Lightning Network was created to facilitate small P2P transfers and trade. This is a network in which users can create channels. Transfers between such channels are inexpensive and take only a few seconds. Transfer verification first occurs at the application level, rather than on the blockchain. The second-level solution is considered a half-measure and does not allow for the achievement of the blockchain’s goals.

First-level solutions

These are much more difficult to design and implement solutions, but they have great potential and will change the architecture of the blockchain itself.

Developers of various networks offer their own solutions to the “blockchain trilemma” such as the use of multiple interoperable blockchains, sharding, new cryptographic methods, and so on. However, this does not imply that the theorists are necessarily correct or that the “blockchain trilemma” needs to be solved at all. After all, this is an abstract construct, not a physical law.

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