March 2022 | Page 2 of 2 | Shardeum | EVM based Sharded Layer 1 Blockchain

Shardeum is a Layer 1 EVM compatible, sharded blockchain with solid security, low fees, and linear scalability. Scalable Layer 1 blockchains are difficult to build as they support an ever growing ecosystem of DApps: Web 3.0 applications that span from DeFi and SocialFi to Metaverse and NFT marketplaces.

But aren’t the existing Layer 1 networks already crowded? Well, Ethereum, the mother of smart contract ecosystems, is crowded with more DApps than it can currently handle. Further, Ethereum supports a priority fee model for transactions and so the users have been paying exorbitantly high gas fees in exchange for service. Transaction confirmations take anywhere between 5 minutes to hours depending on network congestion. This isn’t ideal for practical use cases where transactions require fast confirmation and finality.

Ethereum’s daily pending transaction count per min. Pending txs: 194,931 as of 23 Feb 12:24 PM GMT

There are several alternate Layer 1 networks that claim to solve this problem but have met with resistance from the Scalability Trilemma. It refers to the situation in which an open network can only possess two of the following three core tenets at any given time: Scalability, Decentralization, and Security. Scalable and secure networks sacrifice decentralization to some degree and become centralized over time. Decentralized and secure networks lack scalability.

What is an Enterprise Grade Blockchain?

Technologies built on blockchains are often lauded for their security and decentralization. However, enterprise users have different requirements than individual users or smaller groups, and existing blockchain technologies don’t always meet these requirements.

A permissioned blockchain or an enterprise grade blockchain can be used to scale up commercial activities within military, government agencies, large scale supply chain, products and services of private companies. Unlike public blockchain platforms, enterprise grade blockchain platforms are often private and permissioned. This means that only authorized users can access the platform. This is important for enterprise users, who often need to share sensitive data.

Due to the ability to limit who may see their data, corporations may think enterprise grade blockchains better meet their objectives than a public blockchain network like Bitcoin.

Dynamic State Sharding: Answer to Scalability Trilemma

Ethereum proposed to solve the scalability trilemma by transitioning from a Proof of Work to a Proof of Stake consensus model and sharding (splitting). It proposed splitting up the network into 64 different shards in addition to the Beacon chain. Sharding the blockchain theoretically enables Ethereum with more processing power resulting in high transaction throughput and efficient storage. The idea is that transactions can be processed by the shard chains (or committees) simultaneously and relayed to the Beacon chain which coordinates these committees.

It is important to note that Ethereum 2.0 doesn’t propose to shard the state of the chain but only the storage as of this writing. Though sharding may allow Ethereum to scale up several times than that of its current throughput, it is being debat e d within the Ethereum community whether the computing power of the chain should be sharded or not since it enables sharded committees to compute smart contracts. Even after The Merge and pivot to PoS, Ethereum shards still have to commit entire blocks. That essentially means, network will only be as fast as the node with the lowest bandwidth that is able to validate the block. As Ethereum’s cofounder Vitalik outlines, there are limits to blockchain scalability, however, sharding is the only solution that attempts to scale decentralized networks.

Shardeum will use a multi-dimensional sharding architecture from its underlying protocol, Shardus. It will spread the network’s load in terms of bandwidth, storage, and computation across the shards. It’s dynamic state sharding will enable smart contract execution on sharded chains. The overall network will have a very high throughput, low latency, and instant finality. It can further auto scale in such a way that TPS proportionally increases with adoption.

Unique Consensus Model

Shardeum uses a Proof of Stake + Proof of Quorum consensus model. Shardeum nodes do not verify blocks but rather the individual transactions with near-instant confirmation and finality before broadcasting them to the consensus group of shards. These transactions are then clubbed into blocks and gets appended to the network history.

When a transaction occurs between two different nodes, the responsibility of verifying the transaction is assigned to the shards to which the nodes belong. These shards then form a consensus group to validate the transaction. This is based upon a novel cross-shard communication model that Shardeum is developing. To efficiently scale the network, nodes in Shardeum are classified into 3 types based on initial plan which is subject to change.

Types of Shardeum Nodes Proposed

Archive Nodes : Archive nodes are nodes that provide storage to the Shardeum network. Archive nodes would require greater storage capacity than the validator nodes. Validator nodes can leverage the storage of these nodes to offload data. This allows the validator nodes to process transactions faster while maintaining security by communicating with the archive nodes to verify the chain history when needed.

Standby Nodes : The Standby node, as the name suggests, ‘stands by’ and waits for its turn to participate in the validation process on the network. They are reserve nodes that come to aid when the load across the network increases. This means that, as more and more users begin to use Shardeum, or even if there’s a sudden spike in transaction volume, the network will scale proportionately. The throughput (TPS) will increase to match the demand. This effectively means horizontal scaling where new nodes add to the network’s processing power.

Validator Nodes : The Validator nodes do the heavy lifting. They verify a transaction as soon as it is received. Verified transactions are gossiped to all nodes in a consensus group consisting of two or more shards, or specifically, the shards with the nodes that are involved in a particular transaction. This is then followed by a quorum (receipts). A successful quorum requires more than 50% of receipt of validity/votes received from the nodes in the consensus group to confirm the transaction on the network. The transaction then gets passed on to archive nodes.

Security

$SHM, Shardeum’s native crypto will be used as fees for transactions to prevent spam and botnet attacks. Nodes are required to lock in minimum collateral before they’re added to the network. Like most peer-to-peer networks, Shardeum keeps malicious nodes in check by slashing the collateral of the bad actors. This ensures that participating nodes are honest and do not act to undermine the network. Transactions are always validated by more than 50% of the nodes in a consensus group which prevents double-spending.

Can a shard be taken over if a bad actor injects over 51% of malicious nodes onto the said shard? Theoretically yes. But that won’t be the case with Shardeum. Nodes are randomly sampled and rotated in and out of a shard. So, at any given time, it would be impossible for the attacker to predict which nodes belong to a particular shard.

Onboarding Permissioned Dapps & Projects at Global Scale

Shardeum is inclusive and flexible to build with. The founders of Shardeum chose it to be EVM compatible to allow easy interoperability of DApps running on various blockchain networks. For example, any application supported by Ethereum, such as Aave, MakerDAO, and Yearn Finance can easily transact with Shardeum in a seamless way.

The real goal of Shardeum, though, is to get everyone on-boarded into the Web3 train including centralized entities like banks, private companies and government agencies. The enterprises of today that rely on centralized systems do so because there’s no scalable alternative. Shardeum envisions a future where it can be used by any business, enterprise, or individual from any part of the world. And because of its ability to scale linearly with the help of dynamic state sharding, any enterprise solution can build permissioned solutions on Shardeum retaining privacy and security of their users/clients. In fact, Shardeum promises to achieve over 100,000 TPS which is way ahead compared to most of its Web2 peers. Simply put, Shardeum is a blockchain for billions of people!

Conclusion

As we saw, Shardeum is solving the triple problem of scalability, security, and decentralization through its unique characteristics, such as state sharding and a unique consensus model.

With the world moving towards a more digital economy, enterprises must look into how they can get into web3 on a large scale. Onboarding apps to web3 can help businesses take advantage of the new technology and ensure that they are able to stay ahead of the curve. As more businesses begin to use web3, adoption will increase on a large scale. This could potentially lead to a more efficient and secure global economy.

We hope you learned how an enterprise grade blockchain platform like Shardeum is bringing a revolution to the web3 space!

Frequently Asked Questions (FAQs)

1. How is an Enterprise Blockchain Different from other Types?

Enterprise grade blockchains are largely “permissioned blockchains,” meaning that businesses and enterprises have full control over them. For instance, they can block transactions that don’t follow their standards.

This is one of the key differences between public ledgers, such as the one on which Bitcoin is based, and enterprise grade blockchains.

2. What are the Types of Enterprise Blockchains?

The two types of enterprise grade blockchain platforms you’re likely to come across are:

Private blockchain platforms: A setup where the network’s regulations are established centrally, and are subject to change at any time. By, for instance, verifying brand-new transactions, this central entity decides who is permitted to participate in the network. This group includes JPMorgan’s JPM Coin.

Consortium blockchain platforms: When two or more parties create a network’s rules collectively, each party is allowed to contribute to the network. This group includes the Meta-backed Diem network.

3. How Popular are They?

Enterprise grade blockchain platforms are growing in popularity as more businesses look to adopt distributed ledger technology. These systems offer a number of benefits over traditional databases, including improved security, immutability, and transparency.

A study conducted by Deloitte confirmed the same, with 53% of enterprises in the survey saying they needed enterprise-grade blockchain technology for their businesses.

Shardeum is an Enterprise Grade Blockchain