This concept is a triangle, with security, decentralization, and scalability written on each corner of the triangle. It is one of the main problems with blockchain networks. Some blockchain networks provide more security and focus on this area. Consequently, a blockchain network that devotes more energy and resources to security may face decentralization and scalability issues. The same scenario can happen if other corners are emphasized.

What Does Trilemma Mean in Blockchain Networks?

Blockchain technology is a widespread technology used in many different fields. It is considered by many experts to be one of the most important technologies not only of today, but also of the future. These opinions often emphasize the advantages of blockchain networks. However, there are still some problems with blockchain networks. These problems are usually categorized under three headings. These are decentralization, security and scalability. It is the so-called blockchain trilemma or blockchain dilemma.

How Is the Concept of Blockchain Trilemma Emerged?

In the early 1980s, computer scientists developed something called the CAP theorem to characterize the most comprehensive version of these challenges and problems. According to the CAP theorem, decentralized information stores, of which blockchain networks are an iteration, can only simultaneously satisfy two out of three guarantees: consistency, availability or partition tolerances. In modern built networks, this theorem appears as the triad of decentralization, security, and scalability of public blockchain networks. In the case of blockchain networks, the CAP theorem has become the blockchain trilemma.

Today, many different public blockchain networks use mechanisms called consensus or consensus. Consensus can be achieved through processes such as Proof of Work centralized network infrastructure or decentralized Proof of Stake. Distributed Ledger Technology can also be preferably structured in different ways.

Building appropriate security on top of a pervasive decentralized network while managing transaction volume at internet scales is a key aspect of blockchain technology. Global enterprises, startups, and the technologist community are building layer-1 and layer-2 solutions to solve or minimize the blockchain trilemma. Layer-1 refers to the most basic layer of a blockchain network. Layer-2 refers to different technical optimizations and projects that are built on top of the existing blockchain network, mostly to solve scalability issues. Striking the right balance between both layers is crucial. These improvements are used as a catalyst for the adoption of blockchain technology and the growth of decentralized networks.

What Are the Components of the Blockchain Trilemma?

The blockchain trilemma has three different components. These components are as follows:

• Decentralization
• Security
• Scalability

Decentralization

Decentralization is the most fundamental philosophy of blockchain technology. Decentralization is important to drive projects across ecosystems. The execution of decentralized processes and technologies does not allow third parties and intermediaries to exist between sectors. For instance, by using mining hardware and platforms instead of banking institutions and financial intermediaries, all intermediaries are eliminated and profit and governance can be provided to larger communities. At the most basic level, decentralized networks achieve mass-based consensus. It means that no user has the power of control or censorship. But being optimally decentralized can reduce network efficiency. Moreover, there can be a cumulative effect on network management.

Security

The security of blockchain networks is a very important issue. Different technologies, projects, theories, and studies are being carried out to protect blockchain networks against all kinds of external attacks. A blockchain network that is not sufficiently secure may be vulnerable to external cyberattacks. In this case, all users using the blockchain network may experience losses and delays. To protect blockchain networks from such attacks, companies, and developers are investing heavily. To ensure network security, blockchain networks organize the distribution of nodes. However, these regulations, which are too centralized, reduce the security of networks that use Proof of Work. When consensus is reached on an open blockchain network with limited node distribution, cyber attackers can more easily mount a 51% attack. By crushing the network, these attackers can manipulate transactions and cause financial damage to users. For instance, in 2020, the Ethereum Classic (ETC) blockchain network, a fork of Ethereum (ETH), suffered three different 51% attacks, reorganizing over 4,000 blocks. It allowed attackers to manipulate the network and double-spend the ETC cryptocurrency, resulting in millions of dollars in lost value.

Scalability

Scalability is an indicator of how high transaction volumes and future growth a blockchain network can handle. Use cases and network density play a big role in scalability. Blockchain networks that experience a decrease in performance as the number of users increases are said to be insufficiently scalable. The blockchain trilemma shows that efforts to increase scalability can harm security, decentralization, or both. There are therefore different strategies for achieving an important balance between the three different issues, or channeling to one side and sacrificing other areas. Blockchain developers take these into account and try to make the best choices for their goals. Layer-2 solutions try to provide alternative solutions to some points of the trilemma.

What Is Ethereum Plasma? Can It Solve Problems?

The scalability problem is the most important challenge of the Ethereum blockchain network. For this reason, the Ethereum blockchain network is constantly working to find a solution to the problem. The limitations in capacity and speed that the Ethereum blockchain network currently faces are an obstacle to its global adoption.

Ethereum Plasma was developed by Ethereum co-founders Joseph Poon and Vitalik Buterin. Ethereum Plasma was theorized in August 2017 as a scalability solution for the network. Joseph Poon is also the creator, along with Thaddeus Dryja, of the Lightning Network, a new scalability solution for Bitcoin that emerged in 2015. Although both Plasma and the Lightning Network were developed as scalability solutions, they have different technologies and processes.

How Does Ethereum Plasma Work?

The main focus of the Ethereum Plasma project is to create a set of sidechains that minimally interact and communicate with the main blockchain network, the Ethereum network. In such a structure, there is a hierarchical layout in which a large number of smaller blockchain networks are embedded into the main blockchain network. These smaller blockchain networks are also called child blockchains or plasma blockchains.

In the plasma setup, the use of Merkle Tree smart contracts plays a big role. It creates numerous chains that are essentially small-scale copies of the Ethereum blockchain network. On top of each chain, other chains can be created. It lightens the load on the main blockchain network.

Each plasma is a customized smart contract. It is built on individual work. It allows these small blockchain networks to operate independently of each other.

Security Measures

The communication between plasma chains and the main blockchain network is guaranteed by fraud and security measures. This means that the main blockchain network is responsible for the security of the blockchain network and measures against attackers.

Each of the plasma networks has its technologies for validating blocks and different practices for fraud prevention. Consensus mechanisms are one of them. The most commonly used consensus mechanisms in plasma networks are Proof of Authority, Proof of Stake, and Proof of Work.

What Is MapReduce?

Plasma mentions a new development called MapReduce computing in its whitepaper. MapReduce provides computation and information organization across multiple databases. In the context of Plasma, these databases are blockchain networks. The tree-like structure facilitates and accelerates data validation. Thanks to this development, the efficiency of the network is greatly increased.

What Is Batch Exit Problem?

The most important problem with Ethereum Plasma is that many users try to exit their Plasma network at the same time, causing congestion and congestion on the main blockchain network. It is referred to as the Mass Exit Problem. Malicious actors can try to exploit this.

Plasma is ultimately a structure created by adding a large number of small blockchain networks to the main blockchain network. It lightens the load on blockchain networks and provides a solution for the scalability problem.