World’s First Auto-Scaling Demo on a Blockchain – Shardeum

Shardeum, a L1 blockchain network, is gearing up for an important milestone on 5th November 2022 just weeks after announcing the completion of its seed funding round that saw it raise $18.2mm. The network will demo a key feature from its innovative technology – auto-scaling. This blog will explain why auto-scalability is crucial to Shardeum’s goal of overcoming blockchain trilemma which in turn will help it to keep the gas fees very low and constant on the network.

The demo will be both an in-person and online event. It will be hosted/live-streamed from Richardson IQ, Texas. Co-founders of Shardeum, Omar Syed and Nischal Shetty, will host the event and take questions from the audience. Here’s a little snippet from Nischal’s recent tweet about gas fees to give you a context and why it matters. After leading the crypto/Web3 ecosystem from the front in India since 2018 with his trademark Day# posts, he really knows a thing or two about how Web3 can realistically replace Web2. It shouldn’t surprise you when you run into the tagline of Shardeum which is “Decentralization for everyone”.

Milestones Achieved So Far

Shardeum was launched in February, 2022. The project’s protocol layer is called Shardus which is developed by Omar Syed and his team since 2017. Shardus previously had demonstrated auto-scaling and linear scaling features which were key elements to launch Shardeum and its mission to onboard billions of users to Web3. This was possible with the help of sharding and more specifically, dynamic state sharding which is the most advanced version of sharding types used by more recent blockchain networks such as Zilliqa and Near. The protocol further completed EVM integration earlier in 2022 making Shardeum an EVM-based layer 1 smart contract platform that can scale linearly with atomic and cross-shard composability.

After Shardeum Foundation was structured in Q1 of 2022, the project set its sights on successfully demonstrating linear scalability to its community for the first time as a layer 1 open source blockchain platform. Linear scaling, in simpler words, means the capability to scale up by adding more nodes to the network. And with more nodes, project aims to not just scale infinitely but expand horizontally by allowing average users like you and me to run a node on the network and keep it safe in return for rewards. April 2022 marked the first time linear scalability was demonstrated by a blockchain network. The below images were taken from the demo event that shows the TPS with 100 nodes and the TPS with 200 nodes. Apologies for the poor quality of the images.

This was followed by the alphanet (testnet) release later in April named ‘Liberty’. Between alphanet 1.0 and 2.0 release, the project saw its community grow with 100k+ users, 1 million+ transactions and 7.5k smart contracts deployed on the network as shown in this image below which is from the network explorer page.

The network is currently on alphanet 2.0 and is expected to launch its betanet at the end of 2022 with the mainnet planned for Q1 of 2023. With a breakthrough technology, the testnets are undergoing rigorous testing with the help of core developers and the lively community. If you are wondering what was the need for a L1 now, the answer lies in the project’s core belief that solving the existing problems of a public blockchain should be accomplished at the foundational level for the larger ecosystem in mind. While the project does not want to reinvent the wheel by developing a unique virtual machine, it believes that leaving security and scalability issues in the hands of Layer 2s and sidechains is not a great idea because that takes us to the same problem Web3 was introduced to fix – centralization – which openly promotes putting the power in the hands of far too few people.

That’s also precisely why the project is not focused on competition, rather, the focus is to develop and finetune a superior technology which will be made open-source soon. The idea is to eventually inspire other Web3 networks to prepare for onboarding billions of users and DApps. And if anyone else wants to develop the technology further in the future, that will be considered as one of the success stories of the project.

Congestion, Rising Gas Fees & Outages

Decentralization is expensive when more transactions are submitted to a blockchain than the network can handle resulting in congestion. When a blockchain becomes congested, a queue of pending transactions builds up causing wealthy users to bid with higher gas fees so they can skip the queue. The miner extraction problem, MEV crisis, we see today is a side effect of blockchain networks unable to scale linearly and in practice, scaling vertically instead making it unaffordable for average users to run a node due to high hardware requirements. This translates to high cost of running a network which results in high gas fees for average users whenever there is a demand spike on the network. Not to mention the outages that frequent such blockchains.

What is the Solution?

Understanding How Transactions are Processed on Shardeum

Let’s start this interesting exercise briefly by understanding how transactions are processed on Shardeum. Unlike typical blockchain networks, nodes in every shard on Shardeum will validate each transaction individually and reach consensus on them. With dynamic state sharding, nodes are assigned multiple address ranges so when consensus happens on individual transactions, network will process them simultaneously. Such transactions are then batched together in partitions and passed onto archive nodes on the network who are responsible to maintain the transaction history.

In typical blockchains, transactions are first added to a block and consensus is applied at a block level which means processing can only happen sequentially slowing down the network. Moreover, the recent blockchains with static sharding run into the problem of waiting to form a new fixed shard before processing every transaction.

Dynamic State Sharding by Shardeum

And since consensus is done at transaction level, the network will shard its state by evenly and dynamically distributing compute workload, storage, and bandwidth among all the nodes. Dynamic state sharding will work hand in hand with Shardeum’s auto-scaling feature allowing the network to automatically adjust the number and size of shards based on the current workload. This allows the system to optimize performance and maintain high levels of scalability as it grows and evolves.

Besides from facilitating parallel processing of transactions, validator nodes on Shardeum will thus need to download only the current state of the network pertinent to the transactions they handle making it affordable for average users to run nodes and keep it safe. Light architecture as such facilitate Shardeum to take advantage of its other breakthrough features including auto-scaling. Note, although auto-scaling is not new, incorporating this feature at the protocol level will be the first time ever by a layer 1 blockchain.

Shardeum Scales Linearly

With this in place, every node added to the network will increase the transaction throughput instantly. So basically, by simply adding more nodes from the network’s ‘standby’ validator pool during peak demand, the TPS will increase proportionally making Shardeum the first Web3 network to scale linearly. And this is the main X factor that impacts every other outcome on a blockchain network favorably including throughput, decentralization, security and constant transaction fees irrespective of the demand in the network.

Shardeum & Auto-Scaling

Asides from its capability to scale linearly through dynamic state sharding, Shardeum will make use of one of the hallmarks in its technology – auto scaling – which will allow the network to automatically increase or decrease its TPS (throughput) capacity based on demand in the network.

Autoscaling will work by measuring the network load every cycle (60 seconds) and coming to consensus on the required number of validator nodes needed to process the current load. This is similar to the Bitcoin network coming to consensus on its difficulty level. For example, when an application on Shardeum goes viral, the network will react by independently adding more active validator nodes to increase throughput capacity. If traffic on the network goes down, it would shrink the number of active validators and keep the operations on the network sufficiently nimble. Remember, auto-scaling is self executed without any need for intervention from an intermediary.

Why Auto-scaling Matters?

Auto-scaling is important for quite a few notable reasons. Firstly, when you build a decentralized network, it should ideally be able to self-govern the number of nodes with an optimal and dynamic incentive mechanism. Maintaining high efficiency while scaling to meet demand is what will help keep the cost of the network and ultimately the average transaction fees low. Secondly, auto-scaling helps to maximize decentralization and security.

Consensus algorithm on Shardeum will not only help validator nodes to reach consensus safely but also will help the network to randomly rotate the validator nodes in and out of the system. When a validator node is rotated out, a ‘standby node’ is rotated into the network to validate transactions. And when the traffic is on the move, the network will make use of ‘standby node’ concept accordingly. This is essential for any blockchain network aiming to scale up via sharding and parallel processing of transactions. And finally, as previously indicated, auto-scalability and load balancing are techniques leveraged by traditional technology powerhouses to seamlessly scale up their networks as more users joined them.

In Conclusion

As the project co-founder tells, while sharding is ultimately the best way to tackle the scalability issue, applying it to blockchain-based networks is not nearly as easy as applying it to centralized databases. In a sense, project is aiming to land the rocket back on its launchpad, albeit, the blockchain version of it. With the demonstration of linear scalability back in April 2022, Shardeum has evidently overcome that bottleneck. Now, Shardeum team can’t wait to present you with the autoscaling live demo on the network thereby becoming the first L1 platform to do so. So, register and come join us live @ Richardson IQ, Texas or via online on Saturday, 5th November between 3 – 4 PM UTC. See you there!

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