Our Solution to the Scalability Problem in Web3

As the adoption of the blockchain technology has grown, so have the challenges associated with scaling these networks to meet global demand. One of the most common topics surrounding these hurdles is the lack of scalability, which affects both transaction throughput and finality times:

Transaction throughput refers to the number of transactions per second (TPS) that a blockchain can process. Finality time is the amount of time that a transaction takes to become irreversible and permanently added to the ledger.

This article dives into the scalability issues faced by traditional blockchains, the limitations of current solutions, and how Highlayer overcomes these challenges.

The Scalability Challenge

Bitcoin, the first and most well-known blockchain, was designed to act as an immutable ledger for digital transactions. It serves as a decentralized and trustless solution to the double entry accounting process in peer-to-peer currencies. With this in mind its focus was on decentralization (i.e. the ledger being free from manipulation and editing by centralized organizations), and also security (i.e. tamper resistant). 

Therefore, while the Bitcoin network is resistant to censorship and double-spending attacks, it is unable to scale to accommodate a large volume of transactions, managing only approximately 7 transactions per second. A number too low for efficient smart contracts and decentralized applications.

Ethereum, while more versatile in terms of smart contract capabilities, also struggles with scalability, handling about 15-30 transactions per second, due to the need to reach decentralized consensus on transactions and limited block sizes. Other prominent networks, with different protocols, have published network transactions per second upwards of 50k, however, these same networks have constantly suffered lagging and in some cases, total network crashes. 

These scaling limitations have led to significant issues during periods of high demand. A notable example is the 2017 CryptoKitties surge on the Ethereum network, where the popularity of a single decentralized application caused network congestion, resulting in delayed transactions and skyrocketing fees.

Current Solutions

Various solutions have been proposed to address the scalability problem, each with its own unique advantages and limitations:

Sharding

Sharding involves dividing the blockchain into smaller, more manageable pieces called shards. Each shard can process transactions independently, significantly increasing the overall throughput of the network. However, implementing sharding is complex and can introduce new security risks.

Appchains

Appchains are application-specific blockchains that operate independently but can interoperate with a main blockchain/other appchains. This approach allows for greater scalability by offloading specific tasks to dedicated chains. However the security/decentralization of inter-connected Appchains is lower than the security/decentralization of global monolithic decentralized systems, such as Bitcoin and Ethereum.

Layer 2 Networks

Layer 2 solutions, such as rollups and state channels, build on top of existing blockchains. These solutions process transactions off-chain and only settle the final state on the main blockchain, reducing the load on the base layer.

Many layer 2 solutions, in particular on Ethereum, are EVMs utilizing tech stacks which operate in a similar way to Ethereum. While these can help process transactions of the layer 1 and reduce congestion, they mostly still require their “data layer” to be the layer 1, which still impacts the base chain. This is problematic when the base layer chain is ethereum (1.77 MB per block), or Bitcoin (4 MB per block).

Ethereum Layer 2s have attempted to solve this conundrum by relying on an external data layer, however this fundamentally impacts the decentralization of the data, which then begs the question - why build on blockchain in the first place?

Highlayer’s Solution to Limited Scalability

Highlayer addresses these scalability challenges through a combination of innovative technologies designed to enhance scalability, while maintaining Bitcoin’s decentralization.

Hybrid Execution Model

Highlayer’s hybrid execution model combines the best aspects of sequential (like Ethereum) and parallel (like Solana) execution. This model allows for efficient execution of computationally intensive tasks without blocking other transactions. By enabling parallel processing where it matters most, Highlayer ensures that the network can handle high-complexity transactions while not interrupting simpler ones from execution.

Self-Sustainable Data Availability System (SSDAS)

SSDAS tackles two fundamental issues:

1 - a reliance on the Layer 1 as the data layer (limits scalability)
2 - a reliance on an external data layer (causes centralization)

Data availability is critical for maintaining the integrity and security of blockchain transactions. Highlayer’s SSDAS ensures that transaction data is permanently available, preventing issues like sudden seeding attacks and enhancing the overall security of the network. This system leverages the architecture of traditional layer 1 blockchains while mitigating their limitations.

All Highlayer nodes contain a full copy of the network ledger. This prevents node transaction data from being tampered with and edited, just as is the case with Bitcoin. 

Scaling for Blockchain’s Mass Adoption

The need for scalable blockchain solutions is more pressing than ever. As the adoption of blockchain technology continues to grow, addressing the scalability problem is crucial for ensuring the sustainability and usability of decentralized networks.

By focusing on scalability, efficiency, and accessibility, Highlayer provides a robust platform for the next generation of decentralized applications, ensuring that blockchain technology can meet the demands of a global user base.

Thing Big. Build Hi.