Vitalik — Ethereum en route to a million transactions per second

Kieran Smith , 07 Jun 2018 - EthereumTransactions Per Second

Ethereum creator Vitalik Buterin has hinted that the smart contract platform is working to scale its transactions per second capacity to a point previously thought impossible


Scaling is the one of the key stumbling points to blockchain adoption, and has long been the focus of developers trying to push the technology forwards.

Recent events, however, have given Ethereum enthusiasts reason to be optimistic with Ethereum creator Vitalik Buterin explaining in a recent OmiseGO AMA session, that a synergy of first and second layer scaling solutions (Sharding and Plasma) could enable the Ethereum network to manage up to one million transactions per second, enough to “handle most applications” that are currently being developed.

In its current state, the Ethereum network can process a maximum of 15 transactions per second (TPS). A figure proven inadequate by the burden of decentralised apps like CryptoKitties, which tested the limits of the network last December, renewing the focus on developing scaling technologies.

How many TPS does Ethereum need?

VISA, which is often set as a benchmark against blockchain, handles around 2,000 transactions per second, while larger financial institutions like stock exchanges can execute up to eighty thousand transactions a second.

However, this is perhaps a misguided comparison, as Buterin suggests that the majority of the demand for network capacity will come from outside the realm of financial applications, citing IoT devices as potentially creating future demand for up to hundreds of thousands of transactions per second.

More immediate are the ambitious plans entertained by ICOs on the platform, which range from decentralized social networks, to market-driven forecasting technologies, and even complete blockchain jurisdictions.

As a confluence of the demand created by these applications and the capabilities of the platform, an endgame of TPS in the “low millions” is reasonable, Buterin says, although billions is still the “long-term goal.”

The route to one million TPS

A hard-coded limit on the number of computations per block caps Ethereum at 15 TPS, which makes scaling solutions necessary for greater network capacity.

Sharding, a Layer 1 scaling solution, is cited by Buterin as the first protocol that will allow Ethereum to scale effectively. Sharding divides the Blockchain network into fragments called shards that contain their own independent piece of state and transaction history, which are then equipped with a group of nodes responsible for processing the information of certain fragments.

This means that not all nodes in the Blockchain are required to process each piece of data installed on it, which optimizes the whole process. Key to reaching one million transactions, Buterin says, is the idea of “quadratic sharding” which layers this same structure on top of itself, potentially taking transactions into the “hundreds of thousands and millions.”

Sharding works in conjunction with Plasma, which is a Layer 2 solution described by Buterin as a “special construction that’s connected to the blockchain and gets alot of decentralization properties from it, but at the same time has much higher throughput by itself.” This works in a similar way to the Lightning Network, in that it allows Ethereum to efficiently process micropayments by creating smaller off-chain networks

A synergy of scaling solutions

Buterin noted specifically that it is the synergy between these Layer 1 and Layer 2 solutions that could vastly increase Ethereum's scalability,  enabling the network to handle millions of transactions per second and support most applications:

“The reason I think Layer 1s and Layer 2s are complementary is because ultimately if you look at the math, the scalability gains from Layer 1 improvements and Layer 2 improvements do ultimately multiply up with each other. if you have a sharding solution then the sharding solution by itself might increase the scalability of ethereum by a factor of 100 or eventually even more.

But then if you do plasma on top of a scalability solution then what that means is that you're not doing a hundred times of the amount of activity, but you are doing a hundred times the amount of entrances, a hundred times the amount of exits, etc...”

When Buterin left venture capital firm Fenbushi to focus on the future of Ethereum earlier this year, he made some audacious promises. But nearly six months later, it seems that 2018 might yet be the “year where all of the ideas around scalability, Plasma, proof-of-stake, and privacy [...]  are finally going to turn into real, live working code“