Shahzad Nathani, Head of Operations and Partnerships at Shardeum, shares how blockchain networks try to overcome the blockchain trilemma.
The blockchain trilemma, the challenge of simultaneously achieving decentralisation, security, and scalability, has long been considered one of the most formidable obstacles in distributed ledger technology.
For years, developers faced a seemingly impossible choice: maintain true decentralisation at the cost of transaction speed, or sacrifice network distribution for performance gains. However, innovative solutions are emerging that challenge this fundamental trade-off, offering new pathways to achieve both robust decentralisation and high-performance throughput.
Understanding the Core Challenge
Traditional blockchain networks like Bitcoin and early Ethereum face inherent limitations in transaction throughput. Bitcoin processes roughly 7 transactions per second (TPS), while Ethereum handles approximately 15.
These limitations stem from the deliberate design choices that prioritise decentralisation and security. Every transaction must be verified by thousands of nodes across the network, creating computational bottlenecks that prevent rapid scaling.
The challenge becomes particularly acute when compared to centralised payment processors like Visa, which can handle over 65,000 transactions per second. This performance gap has historically limited blockchain adoption for consumer-facing applications and enterprise solutions requiring high-frequency transactions.
Revolutionary Solutions Transforming Blockchain Networks
Layer-2 scaling solutions represent the first major breakthrough in addressing the scalability challenges without compromising the base layer’s security. These solutions operate on top of existing blockchains, handling transactions off-chain while periodically settling batches of transactions on the main network.
The Lightning Network for Bitcoin exemplifies this approach, creating payment channels between users that enable instantaneous, low-cost transactions. Similarly, Ethereum’s Layer-2 ecosystem has
exploded thereby helping some achieve transaction speeds comparable to traditional payment systems while maintaining cryptographic proof of their validity through the underlying blockchain.
State channels and rollup technologies have proven particularly effective, with optimistic rollups and
zero-knowledge rollups processing thousands of transactions in batches before settling on the main
chain.
Sharding: Parallel Processing Revolution
Sharding is a promising solution. This involves dividing the blockchain into smaller, more manageable
segments known as ‘shards’. Each shard processes a portion of the network’s transactions and data
in parallel.
This parallel processing significantly boosts the network’s throughput, as multiple transactions can be confirmed simultaneously across different shards. Ethereum 2.0 is implementing sharding with 64 shard chains, theoretically increasing the network’s capacity by the same multiple.
Some Web3 projects have already demonstrated successful sharding implementations, achieving
thousands of transactions per second while maintaining decentralisation through careful validator
distribution across shards.
The technical challenge lies in cross-shard communication when transactions need to interact across different shards, the network must coordinate these interactions while maintaining security and consistency across all parallel chains.
Consensus Methods
Consensus mechanisms determine how blockchain participants agree on the validity of transactions.
Consensus methods like Proof of Work (PoW), which Bitcoin uses, are secure but resource-intensive
and slow. Consensus methods, like Proof of Stake (PoS) and Delegated Proof of Stake (DPoS), are
designed to enhance blockchain performance.
PoS, for instance, reduces energy consumption and transaction confirmation times by allowing participants to ‘stake’ tokens instead of solving energy-intensive puzzles, as PoW does. DPoS, used by some blockchains, speeds up transactions by having a few selected validators confirm transactions, though this approach may reduce decentralisation.
These innovative consensus methods strive to achieve a balance between efficiency and fairness.
Modular Blockchains
Modular blockchains aim to break down blockchain functions into separate layers that can be optimised independently. For instance, instead of relying on a single network to perform multiple functions (data storage, transaction validation, smart contract execution), modular blockchains divide these tasks across specialised networks.
With modularity, each layer of the blockchain can evolve without disrupting the entire ecosystem, making the network more efficient without compromising decentralisation.
Zero-Knowledge Proofs: Privacy Meets Performance
Zero-Knowledge Proofs (ZKPs) are cryptographic techniques that allow one party to prove to another that a statement is true without revealing any underlying data. This breakthrough enables blockchains to verify transactions or computations efficiently without exposing sensitive information.
ZKPs, especially in the form of ZK rollups, can significantly improve scalability by compressing multiple transactions into a single proof that is quickly verifiable on-chain. This not only enhances privacy and security but also reduces the computational load on the main network, allowing for greater transaction throughput while maintaining decentralisation and data integrity.
Interoperability and Multi-Chain Architectures
The future of blockchain scalability increasingly points toward multi-chain ecosystems where
specialised networks handle different use cases while maintaining interoperability.
Cosmos and cross-chain bridges and atomic swaps facilitate this interoperability, allowing assets and data to move freely between different blockchain networks. This represents a fundamental shift from the monolithic blockchain approach toward a more distributed and scalable ecosystem architecture.
Real-World Impact and Current Adoption
These technological advances are translating into tangible improvements in blockchain usability.
Decentralised finance (DeFi) platforms on networks now regularly handle transaction volumes that
rival traditional financial systems while maintaining transparency and permissionless access.
Gaming applications like Axie Infinity and NFT marketplaces like OpenSea have demonstrated that high-frequency, interactive applications can successfully operate on blockchain networks without sacrificing user experience. Enterprise adoption is accelerating as networks prove their ability to handle business-critical workloads in supply chain management, identity verification, and cross- border payments.
Future Outlook
Blockchain technology continues to evolve, and new solutions are being developed to address the balance between decentralisation and performance. Technologies like ZK rollups, danksharding, and data availability layers are being tested to further enhance scalability and decentralisation.
The blockchain ecosystem is on a journey of growth and improvement. Developers are continuously exploring new ways to balance security, fairness, and performance. Although a perfect solution doesn’t exist yet, the industry is progressing toward an environment where blockchain networks can deliver both decentralisation and performance at scale.
The goal for blockchain networks isn’t perfection; it’s practicality. The blockchain industry has indeed
shifted from pursuing theoretical perfection to focusing on practical, real-world utility.
Blockchain developers are focused on finding a balance that works well for real-world use cases, ensuring speed, security, and fairness for users around the world. As innovation continues, the dream of achieving decentralised, high-performance blockchains may be within reach.
Shahzad Nathani is the Head of Operations and Partnerships at Shardeum, an auto-scaling EVM-
based Layer-1 blockchain, where he supports multiple organisational functions from entity incorporation and jurisdictional legal matters to defining scopes of activities.
