All blockchain networks, including the Ethereum blockchain, are faced with problems with scalability, transaction latency, and expensive transaction costs. Ethereum DApps are based on the Ethereum blockchain protocol.
The network is based on the ‘proof-of-work’ work’ (POW) consensus algorithm, which requires the validation of transactions from the vast majority of participating nodes, which causes scaling issues.
Limitations on block size and competitive POW mining lead to delays in including transactions in the next block. Additionally, users must pay a growing amount of fees to miners to ensure their transactions are added to subsequent blocks. Blockchain developer communities, including Ethereum developers, are exploring various solutions to these problems.
What is an Ethereum Dapp?
Before we know the answer, we need to know some basic information about Ethereum. It is important to note that different protocols such as EOS, NEO, Stellar, Tron, and Cardano are also utilized to create Dapps but Ethereum is the preferred choice for most users.
Scope of Ethereum Dapps
Even though various blockchain-based networks are entering this market, Ethereum dApps will surely lead the way for decentralized applications. The three most popular Ethereum DApps are worth over $19 billion, more than all the other EOS dApps!
5 ways to scale Ethereum Dapps
1: Scaling Ethereum Dapps using State Channel
State Channels permit users to perform peer-to-peer transactions ‘off-chain’ only, sending messages to the main chain only when they leave the channel. They’re built similar fashion to the Bitcoin Lightning Network.
They’re payment channels that let users transact transactions that are not on the main chain but only return to it to pay the channel. It’s similar to bar tabs.
State channels are especially intriguing since they allow users to transmit state updates, including intelligent contract updates, instead of simply money.
2: Utilize the technology offered through Ethereum. Ethereum “Casper Protocol”
Casper is an application that can convert Ethereum’s existing Proof of Work (PoW) model to Proof of Stake (PoS). Miners use energy to resolve a cryptographic problem and mine a block with PoW.
They’re rewarded if they can solve the equation; however, the process takes huge amounts of power (and continues to demand increasing amounts). It is expensive and inefficient, and the PoW model is currently priced at $1.2 billion annually.
Within PoS, “validators” take the place of miners and “validate” (rather than mine) blocks to the blockchain. Validators place their money on one particular block instead of spending energy on the block.
The block with the highest amount of money invested is verified before being included in the chain. Validators “bet” on the likelihood that a particular block is added to the blockchain by locking their funds into contracts until the following block is added.
They will earn a reward by placing their bets on the right block. They could lose their money in the event of committing fraud in trying to verify a block using inaccurate or invalid information.
3: Scaling through the use of “Sharding” technology
Sharding refers to horizontally dividing a database to help spread the burden. In the case of Ethereum sharding, it reduces network congestion and speeds up transactions per second by creating new chains, referred to as “shards.” It will also ease the burden for each validator since they won’t have to process the entire transactions in the network.
Sharding is one of the most complex solutions in Ethereum’s roadmap, and extensive research and testing are needed before it can be implemented.
Ethereum developers need to develop an inter-shard communication system that allows smart contracts running on one shard to connect with smart contracts that reside on other shards.
4: “Plasma” as an effective scaling solution
Plasma is a different scaling technique that manages operations “off-chain” that are not on the main Ethereum blockchain. Plasma allows a variety of blockchains (referred to as “child chains”) to be separated from the main blockchain (referred to by its “root chain”).
Each child chain can process and keep its transaction data but still rely upon the roots chain’s fundamental security. With Plasma, the root chain is the central enforcer of all chain children’s calculations.
On the other hand, needs to be calculated only if there is a dispute in some of the parent chains. This technique allows a chain comprising child chains to break the blockchain transactions to maximize efficiency and speed. Each child chain’s child nodes can make an exit and export a copy of their transaction to the main chain if they wish to.
5: Utilize the technology of “Raiden Network.”
Raiden is an additional off-chain scaling solution that permits nodes to keep track of transactions between each other without having to rely on an entire chain of nodes to confirm every transaction.
A “state channel” that is a two-way channel that connects users can be created by two different nodes. “Messages” are in the form of transactions exchanged between two nodes and verified by each party to guarantee immutability.
Raiden is handy for frequent and predictable payments, like a client who is sure that they will pay an organization $20 per week to get a service or pay for the local eatery regularly.
The root blockchain is cleared of vast amounts of data because transactions are confirmed and recorded between the two nodes, not in each block.
Anyone participating in a state channel may decide to end a transaction at any point, and the result of all transactions is transferred into the blockchain root and added to each block.
This means that, after one year of paying 20 dollars per week, the user can verify a block for one $600 transaction rather than thirty separate transactions of $210.
Ethereum was the initial network to allow developers to develop amazing apps with substantial global reach over the decades. Today, Ethereum has thousands of users engaged in scaling.
It is likely to exert an impact in the comparable period, resulting in a more pleasant user experience and a reduction in transaction costs. This will result in an enhanced network that is more affordable and user-friendly.
Why do we need to scale Dapps?
Before we can answer the question of what we can do to increase the capacity of Ethereum Dapps, we need to understand why we should do it.
Since the number of users who utilize Ethereum has grown, the blockchain has reached its capacity limitations. This has made it more expensive to use the network, requiring the recourse to “scaling options.”
Various solutions are being studied, tested, and implemented, employing strategies to accomplish similar objectives.
Why does Ethereum have scaling issues?
Nodes also relay blocks and validated transactions to other nodes, keeping the entire network current. Since every single node completes this kind of validation work, blockchains such as Bitcoin and Ethereum have a lower TPS rate which can cause scaling issues.
Is Ethereum a layer 1 or 2?
Layer 1 is the foundation blockchain. Ethereum and Bitcoin can be considered layer 1 Blockchains as they serve as the foundation on which the various layer 2 networks are built. Some examples of projects that are layer 2 are “rollups” that are built on Ethereum along with Bitcoin and the Lightning Network on top of Bitcoin.