The Blockchain Trilemma

— By Frederic Chemaly

Finding the perfect balance between security, scalability, and decentralization.

The Trilemma of Blockchain

Any network, by nature, will be a combination of two out of three of those features. Let’s take bitcoin as an example, which is very decentralized and the most secure network in history but is not scalable. It’s slow, as we only have seven transactions per second, which isn’t a viable solution for a considerable amount of applications, where speed and a mass amount of transactions are needed. Another example is Polygon, which is scalable and somehow secure but is fully centralized. The network only has 100 nodes, 100 validators and most of these validators are people from their closed communities.

The Trilemma

The pillars of this triangle

Decentralized: The network is partially controlled by all participants.
Secure: Prevents malicious entities from exploiting the network.
Scalable: Supports a large number of transactions without increasing delays and fees.

Why only two out of three?

As of January 2022, TikTok had 1 billion monthly active users worldwide. Let’s compare it to one of the biggest networks, Ethereum. Ethereum has roughly 10–20 million monthly active users as of March 2022, and users can notice a huge amount of transaction fees at peak times, which sometimes can reach a few hundreds of dollars. Considering those metrics, Ethereum is still at around 2% of Tiktok’s total monthly active users.

Daily Ethereum Network Participants

We can see what the non-scalability term is based on. If it were to one day reach this amount of mass adoption, the system as it is now, wouldn’t be enough. That’s one of the reasons why people build L2 solutions on top of L1. Two examples would be Arbitrum and Metis Andromeda, which are layer two ecosystems, built on top of a layer one network, that is Ethereum in this case. By doing so, people add a factor of scalability, while still benefitting from the decentralized and secure L1.

L1 and L2 Networks

Having high scalability is essential to building utilities on top of blockchains like games, social media platforms, or even messaging apps. Unfortunately, this level of technology is still unavailable for developers, and they might choose to sacrifice security to reach the requested levels of scalability.

Decentralization and security are heavily correlated, in a way that when a network is more decentralized, the odds of someone performing a 51% attack becomes minimal. But this equal power given to the validators, which is a democratic-like system, has disadvantages when making decisions because members can agree on some controversial features.

One of the main reasons behind the attacks on blockchains is the fact that it’s open-source. Hackers can exploit vulnerabilities by studying the code which is available online for anyone. Exploits are becoming rare with the emergence of known code practices and security checks, but programmers still can’t prevent a 51% attack. Scalability and security work in opposite directions, security tends to keep the network stable while scalability wants it to go big and fast. A blockchain can be slow and centralized but it can never lack security, it’s one of the core concepts this technology is built on, which requires a lot of resources.

Conclusion

The trilemma must be solved before blockchain’s mass adoption can be reached. This is an important topic for the industry to revolutionize our world. We are seeing new concepts that might solve this, like ETH 2.0, so keep your bets on the developers.

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