Thread by @orbisproject

Solving blockchain trilemma is the holy grail of #crypto

Mass adoption won't happen if a #Blockchain cannot scale WITHOUT compromising #decentralization

Orbis provides a key piece to #Cardano in solving this puzzle

🧵 Here's a thread on Blockchain Trilemma: 👇

The blockchain trilemma is a term coined by Vitalik Buterin

To address the trade-offs developers of #blockchain must make

To achieve scalability

As we see very often in the #Blockchain space, developers are forced to sacrifice one ‘aspect’ for the sake of the other two

The root of the blockchain trilemma lies in the fact that

the underlying structure of decentralized networks

comes with unique challenges when compared to centralized networks

Researchers recognized these challenges way before #Bitcoin was invented

& formulated "CAP Theorem"

So what is CAP Theorem?

Formulated by computer scientist Eric Brewer, it states that

decentralized data stores can only provide two of three guarantees simultaneously

• Consistency

• Availability

• Partition tolerance

Which translates into the acronym "CAP"

In simple terms,

The CAP theorem lets one determine

how to handle the distributed database systems in the event of a network failure

In normal operations, your data store provides all three functions

But in the event of a network failure a tradeoff must be made

Blockchain is an iteration of distributed data stores

If you translate CAP-Theorem into blockchain trilemma

A public #blockchain won't be able to optimize for all 3 qualities

The public blockchain must sacrifice either

• Security

• Scalability or

• Decentralization

Let's dig into the components of the blockchain trilemma:

1. So what Is Decentralization?

#Decentralization alludes to the transfer of supervision & decision-making

from a centralized association (individual, corporation, or group of people)

to a dispersed network

Decentralization is the central ethos of #blockchain technology

A public blockchain is a distributed database

That is spread across a network of nodes at various locations

Decentralization ensures that

no one entity can control or censor the data that transact through it

If a public blockchain is decentralized, it doesn't mean it's secure, too.

2. Here comes #Blockchain Security.

It is the ability of the blockchain system to operate as expected

defending itself from malicious attacks, bugs & other unforeseen issues

Taking the example of #Bitcoin

Hash rate is a crucial metric that helps determine the strength of the security of the #Bitcoin network

A higher hash rate means a highly secure network

And fewer chances of any disruption on the network from malicious groups

Even if a #blockchain is decentralized and secure

It may not be scalable to accommodate a meaningful full number of users

3. There comes scalability.

It refers to the blockchain’s ability to support

high transactional throughput & future growth

It is the only way for blockchain to compete with legacy, centralized platforms

Whose network settlement times & usability are far superior

But Blockchain Trilemma tells us

that greater scalability is possible

ONLY at the cost of security, decentralization, or both

So how can a public #blockchain crack this "trilemma" to scale

to accommodate billions of users & compete with the legacy systems!?

The answer to this comes in the form of Layer-1 and Layer-2 scalability solutions

#Cardano is a fully decentralized & secure platform

With deep roots in a peer-reviewed academic approach

Utilizing formal development methods & Haskell

Built to be a global financial platform

So let's take a look at how Cardano is addressing the #blockchain trilemma👇

There are two different approaches to solving the blockchain trilemma

• Layer 1 approach

• Layer 2 approach

#Cardano is tackling the blockchain trilemma

by making the L1 more scalable with two different techniques

• Diffusion pipelining

• Input endorsers

1. Diffusion pipelining

It is an L1 scaling solution

expected to be implemented on #Cardano this year

Pipelining is a technique that improves block propagation times

by allowing the blocks to be propagated Before full validation of blocks has taken place

This is achieved by removing ''repeated'' block body validation from the propagation path

So that the node can propagate the block & validate the block-body at the same time

This allows for larger blocks

& thus increased transaction throughput without changing consensus rules

2. Input endorsers

It's planned to be implemented on #Cardano

It improves block propagation times & throughput

by allowing transactions to be separated into pre-constructed blocks

It also improves the consistency of block propagation times & allows higher transaction rates

Recently at the #concensus2022 @InputOutputHKreleased a video

demonstrating the concept of input endorsers

This L1 scaling solution is expected to enable #Cardano

to have a very high throughput

without compromising both decentralization & security

Both these L1 scalability solutions are expected to scale #Cardano

to a certain extent in the short to medium term

without weakening decentralization & security

Though, these solutions cannot replace the need for a long-term Layer-2 approach to achieve scalability

So let's take a look at the L2 scalability solutions

Those are planned or already implemented on #Cardano

• zk-rollups (Orbis)

• State channels (Hydra)

• Sidechains (mamba/milkomeda)

Let's explore these scaling solutions one by one:

1. Sidechains

The core idea behind sidechains is to have a completely separate blockchain

• with its own validators & operators

• that has bridges to transfer assets to and from the L1

Optionally,

Snapshots of the block headers are submitted to the main chain to prevent forks

The snapshots can provide security against forks

Even when the validators of the side chain collude & try to fork out

Milkomeda is a Cardano sidechain, which takes trust from Ouroboros

@InputOutputHK is planning to implement another sidechain "Mamba"

which uses an innovative method known as "Quorum sampling"

which enables the sidechains to borrow the security

directly from "Orouboros" consensus protocol of #Cardano

@InputOutputHK 2. State channels

A state channel is a smart contract

that enforces predefined rules for off-chain transactions

They enable participants to transact quickly and freely off-chain

then settle these transactions on the L1

"Hydra" is an isomorphic state channel

This is very similar to the concept of payment channels in #Bitcoin’s "Lightning Network"

Unlike Lightning, Hydra could execute complex logic

EUTxO architecture of #Cardano allows easy implementation of isomorphic state channels

3. zk-rollups: #Orbis

These are L2 scaling solution

that bundle transaction & execute them off-chain

They then generate a zero-knowledge proof (ZKP) for the hundreds of transactions they've settled off-chain

And then submit this proof on-chain/L1 for validation

After comparing all three of these L2 scaling solutions, #Cardano eventually would have

zk-rollups stand out as the one such L2-scaling solution

which may provide the key to solving the #blockchain trilemma

So let's take a look into the advantages of zk-rollups over others👇

If you compare a zk-rollup with a sidechain

Sidechains are essentially another #blockchain

with limited block space, which do not offer data compression

and store their own data

This makes them limited in scalability as well as decentralization

If you compare state channels with zk-rollups

State channels are not a general-purpose solution like zk-rollups

And only allow transactions between a limited number of participants

This limits the scope of scalability of a state channel

TL;DR:

The answer to the question

whether or not #Cardano would be able to solve the #blockchain trilemma in the long term

probably lies in its ability to pivot towards a rollup-centric approach

embracing the modular #blockchain model

If you are looking to learn more about zero-knowledge proofs and zk-rollups—

Here’s a similar thread on L2 scaling solution "Validium" that you might find useful:

https://twitter.com/orbisproject/status/1542150080009994240?s=20&t=VQnu86Hw-cwoKCH4HEqG1Q