The Ethereum Project

By Team Block697

With the ascendance of the open-source, blockchain-based computing and operating system known as Ethereum, many find themselves reassessing the future of the blockchain industry – wondering whether Ethereum could rise as the dominant player. Despite its meteoric rise, many have serious concerns over Ethereum’s inability to scale. The developers of Bitcoin failed to predict the complications that would arise as a result of network congestion back in 2009. Transaction times became significantly slower, and users incentivized miners by exchanging larger fees for processing their payments faster. 

The Liquidity.Network plans to allow the widespread adoption of blockchain in micropayments, constructed on Ethereums virtual machine. In addition, its objective is to become the general off-chain payments ecosystem by addressing all the restrictions that the Lightning and Raiden Networks are currently encountering. Ethereum’s current transaction capacity accounts for 800k per day. 

Applications such as Etheremon and CryptoKitties prompted a rise in users expressing their dissatisfaction with paying much higher transaction fees and that their transactions weren’t being processed. 15 transactions per second is the current limit for Ethereums processing power. This holdup has prompted the ecosystem to investigate possible solutions to deal with this dilemma. Using the Raiden Network allows transactions to be handled off-chain at elevated speeds, but it may be too late for many of the ICOs hoping to run their dApps on the Ethereum network. 

The creators and developers of Ethereum are presently exploring new ways to reverse the inability for processing capacity to effectively scale – an inherent flaw with the technology. Ethereum is currently looking for outside developers to address the issue of scaling. 

The Ethereum client is literally a fork of Chromium's webkit backend. The idea is that users can build their own interfaces with HTML/JavaScript just like websites, and they will be viewable with the browser much like websites are viewable with the web browser.

Zilliqa - The next Ethereum

A new blockchain startup called Zilliqa, based out of Singapore, has been designed to Implement sharding from the offset – which spreads large databases into much smaller and faster databases across multiple machines and computers. The network holds ambitions to reach Visa level processing power of 4,000 transactions per second. The current results put Zilliqa’s processing power at 2,400 transactions per second. Mindshare, who has developed a close partnership with the new blockchain startup, has expressed their desire to experiment with the new technology – which could lead to an influx of investment into the project if heavy hitters in the space such as Ethereum can’t find a solution to their processing dilemma.  

 While open and efficient because all transactions in the peer-to-peer distributed ledger technology can be seen in real time, one performance problem has been that every entry on a blockchain requires every node to process it. This has the potential to slow transactions such as payments. Due to its chain nature, each new record inserted into a blockchain has to be serialized, which means that the rate of updates is slower than traditional databases, which can update data in parallel. 

This expensive and slow process is justifiable for a global network where all participants are potentially malicious. In a corporate environment, where all participation is controlled, it does not make sense to spend a lot of energy and time for essentially no additional benefit. 

While requiring all nodes (servers) to process each transaction makes blockchain natively resilient to cyberattacks – as hundreds or thousands of nodes would have to be hacked to gain control of the network – it also slows transaction processing and, ultimately, its scalability. 

Ethereum creator, Vitalik Buterin, expressed that the blockchain network has reached one million transactions per day, and with both it and other blockchain projects frequently reaching their full transaction capacity, "the need for scaling progress is becoming more and more clear and urgent." 

 Exploring possible fixes

So far, Ethereum is exploring two possible fixes for the problem. The first, "sharding," would require a small percentage of nodes to see and process every transaction, allowing many more transactions to be processed in parallel at the same time; sharding also isn't expected to diminish the native security of a blockchain because it maintains most of the desired decentralization and security properties of a blockchain. 

The second solution involves creating data-link layers or "layer 2" protocols that send most transactions off-chain and only interact with the underlying blockchain in order to enter and exit from the layer-2 system, as well as in the case of attacks on the system. Layer 2 protocols transfer data between nodes within a LAN or an adjacent WAN. 

The next iteration of Ethereum's blockchain

“A specification for an initial prototype is close to finalized” Buterin said, and a roadmap has been created that allows it to be slowly introduced into Ethereum – first as a ‘loosely coupled’ sidechain anchored into the Ethereum base chain through a ‘validator manager contract,’ later introducing tighter and tighter integration with the Ethereum base chain over time .A reference implementation is being built in python on top of Py-EVM, and a test net in python is not too far away. The Ethereum Foundation, however, wants outside developers to get involved in the next step: the sharding test net and, following that, the sharding mainnet.

"We want [them] to be a multi-client ecosystem right from the start, with the Ethereum Foundation not supporting any single privileged production implementation," Buterin wrote. 

To that end, Buterin said on top of working to solve the problem internally, Ethereum is offering subsidies to programmers who can help find the fixes; subsidies will range from $50,000 to $1 million depending on the scope of the work involved. For developers, there will also the pride in knowing their work could be used in the next iteration of Ethereum's blockchain. 

The Ethereum Foundation-funded research team will continue to build an implementation in python and possibly other languages, but this is intended as a reference and proof of concept first and foremost. While they aim to continue to focus heavily on research and specification, they do not want to ultimately 'win' the competition for which client gets the most actual users once the network goes live.