BlockShots: Blockchain Simplified

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Episode 46 - Rollups Oct 10, 2022

Show notes

Rollups are layer 2 blockchain scalability solutions where the execution of transactions is moved off the main blockchain. Basically, the layer 1 chain is used for keeping the ledger state and providing consensus, while the off-chain layer 2 framework — rollup-is used to execute the transactions and submit the updated state to layer 1.

This approach decouples the work to store the ledger state and execute transactions between the layer 1 and layer 2 respectively. The way it helps achieve scalability is by executing many more transactions within the same block period.

The users send transactions to the rollup. The rollup gets the previous state of the ledger from the layer 1, executes multiple transactions based on this state, and then submits the updated state to the layer 1. The rollup also “rolls up” or bundles all the transaction data and stores it on layer 1 so that any other verifier or rollup node could check the correctness of execution.

There are two kinds of rollups — optimistic rollups and Zero Knowledge (ZK) rollups. In optimistic rollups the transaction execution is verified by other verifiers and they could submit a fraud proof if they find anything wrong with it. While in ZK rollups a cryptographic proof of correct execution of transactions is also submitted along with the updated state and transaction data. Optimistic rollups are hence less secure than ZK rollups, while ZK rollups are slower because of additional proof generation.

Music: https://www.purple-planet.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 45 - Layer 1, Layer 2, and Scalability Oct 02, 2022

Show notes

Initially, there were only one kind of blockchain networks where ledger storage and execution of transactions both happened on-chain. These blockchains were not scalable because of the topics and reasons mentioned in some of the previous episodes.

To achieve scalability and throughput, some solutions try to decouple or divide this work across on-chain and off-chain systems. Some solutions move the execution of tractions outside the chain while keeping the ledger state on the chain. Some other solutions delegate the work to smaller blockchains outside the main chain.

All the these solutions, broadly, come under the umbrella of layer 2 scalability solutions. The main chain where the ledger state and security comes from is the referred to as layer 1.

The basic concept is to scale layer 1 blockchains, we offload or delegate some of the execution to layer 2 solutions. The security comes from layer 1 while the scalability comes from layer 2.

For example, Ethereum and Bitcoin are layer 1 blockchains and plasma and lightning network are layer 2 solutions.

There is one more layer — layer 0. Layer 0 blockchains connect and secure layer 1 blockchains. This is more in terms of blockchain sharding. When we have multiple layer 1 blockchain shards and when we need to verify and connect them all, we use a layer 0 chain. An example of a layer 0 blockchain is Polkadot.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 44 - Block Gas Limit, Block Period, and Blockchain Scalability Sep 26, 2022

Show notes

When we talk about blockchain scalability — which has been the theme for some of the current episodes — we must understand how the block gas limit plays an important role in the scalability discussion.

In general, for any public smart contracts blockchain, it is important to measure and charge for the resource usage while executing smart contract logic. For this, we have gas. The concept of gas makes sure the user pays for the logic they want to execute on the chain. This discourages several kinds of attacks on the blockchain.

Now let’s understand what block gas limit is. A blockchain block is basically a collection of transactions along with some metadata. A transaction is a packet of data that represents a message from a user to a blockchain. So, in totality, a block is just a bigger packet of data. Another thing is blockchains are peer to peer networks. Which means nodes propagate blocks to their peers during the consensus process. There is also a concept of block time which is the period between the production of two blocks.

When we want to propagate a packet of data (a block) across several nodes of a network (blockchain) within a time limit (block period), we need to make sure the size of the data packet is not too large. This allows the block to propagate to maximum number of nodes so that it could be verified in a fully decentralized manner. Hence we need to put a limit on the size of the block.

How do we limit the size of the block? By limiting the number of transactions in it. And how do we measure the size and complexity of transactions? Gas. Hence, the block gas limit is the maximum amount of gas which could be used by transactions in that block.

If we increase the block gas limit, we will have to increase the block period as well. And if we increase the block period, we will have to wait longer for the transactions to be executed by the blockchains. This is how the block gas limit and block period impacts the blockchain scalability.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 43 - The Ethereum Merge Sep 19, 2022

Show notes

Since its beginning, the Ethereum network has been using the Proof-of-Work consensus mechanism. As we know, PoW consumes a lot of energy. Now the Ethereum network is moving to Proof-of-Stake consensus mechanism.

The merge is when the switch from PoW to PoS is going to happen.

Since the December of 2020, there has been a PoS network running in parallel, called the beacon chain. The existing PoW network (main net) and the beacon chain would merge into one and the block production would happen via PoS mechanism. That’s the merge.

All accounts, balances, and smart contracts history of the current Ethereum network would remain intact and only the block production mechanism would change. Before merge — PoW blocks. After merge — PoS blocks.

Read more about the merge here — https://ethereum.org/en/upgrades/merge/

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 42 - Blockchain Performance vs. Scalability Sep 12, 2022

Show notes

When it comes to blockchains, we use the terms performance, scalability, transactions per second (TPS) many times interchangeably. But these are all very different things. I recently read an article on a16z crypto where all these terms were nicely explained and clarified. I encourage you to read this article.

https://a16zcrypto.com/why-blockchain-performance-is-hard-to-measure/

In this episode of the podcast, I am sharing my understanding, mainly after reading this article, of blockchain performance and scalability and how they are different from each other.

Basically, performance is about the current throughput of a blockchain while scalability is about the capability of a system to increase performance by taking certain measures.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 41 - Blockchain Execution Sharding Sep 05, 2022

Show notes

In the last episode I spoke about blockchain scalability and how sharding is one of the ways to achieve that. In this episode, let’s do a double click on blockchain execution sharding.

Sharding, in general, is a term associated with traditional databases. When a database grows too big, it could be divided into smaller databases across several servers based on some property of data. For example, a database with all the names of people in an organization could be divided into 26 servers, each having the names starting with one letter of English alphabet. Each of these servers would be shards of the database. So this is about sharding of databases.

Now let’s consider sharding in blockchains. We know blockchains don’t scale much because all the nodes have to verify all the blocks. Sharding in blockchains is about dividing a blockchain into smaller sub-blockchains and each of these sub-blockchains maintains and verifies their own state. The blocks of these sub-blockchains are produced, validated, and verified by only a subset of nodes. This allows the work to be distributed and not all the nodes have to do all the work. Which, in turn, allows for more scalability and performance.

Sharding in blockchains is being implemented in several ways. Some blockchain platforms have several sub-chains running in parallel and users could use any of these chains for their smart contracts. These sub-chains are also interconnected so that the smart contract and DApps could call each other across different chains.

Some other platforms go a step further to make things more secure by validating the blocks produced by sub-chains using a top-level chain. This allows more security and decentralization while achieving scalability.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 40 - Blockchain Scalability Aug 22, 2022

Show notes

Some of you must have seen on the internet that how Bitcoin and Ethereum and much slower than Visa and other centralized financial systems. The reason is blockchain scalability trilemma. Bitcoin and Ethereum have chose to be more secure and decentralized, and hence they have to give up scalability.

In the last episode, I spoke about the Blockchain Trilemma. About how blockchain could have only two of decentralization, security, and scalability at a time. I also mentioned that there are some approaches and solutions being implemented and researched to circumvent the trilemma. The main purpose of these solutions is to make the blockchains scalable while keeping them decentralized and secure enough.

Most of these solutions fall into the broader category of blockchain scalability solutions. In this episode, we’ll briefly take a look at some of these.

Sharding: The first of the blockchain scalability solutions is sharding. Basically sharding is about distributing the production and verification of blocks into a subsets of nodes so that all the nodes don’t have to do all the work for all blocks. To achieve scalability, we distribute the workload among the nodes using sharding.

Layer 2 Scalability: Layer 2 solutions are about offloading the computation and execution of transactions outside of the main blockchain. The blockchain is used for verification and state updates only. This way the heavy work of computation is not done by the nodes of the blockchain. There are several layer 2 solutions — rollups, side-chains, etc.

On a broader level, these are the two main categories of blockchain scalability solution. However, there are several sub-categories of with different approaches towards sharding and layer 2 solutions.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 39 - What's the Blockchain Trilemma? Aug 18, 2022

Show notes

Blockchains are decentralized networks where all the data is stored and verified by all nodes. To make blockchains usable for real world use cases, they should process large amounts of data. But when all nodes have to process all the data for each block, it is not easy to process a lot of transactions quickly. Blockchains are also public and permission-less networks, hence it is critical that they stay secure.

The blockchain trilemma says that blockchains could have any two of decentralization, security, and scalability at a time.

For blockchains to be decentralized, they should be able to run on commodity hardware so that many users could run the nodes.

Security, in context of blockchains, means that they can continue to work correctly and honestly, even if large number of nodes are byzantine. See last episode for byzantine faults.

Scalability is simply processing large number of transactions per unit of time.

If a blockchain has smaller number of nodes verifying the data, it is not decentralized enough. However, it could process more transactions and could still be secure if these nodes don’t collude.

If a blockchain has many nodes processing all the data, then it would be decentralized and secure. But it won’t scale much.

If a blockchain has nodes running on large servers only, then it could be secure and could process more transactions, but it is not decentralized enough.

There are several approaches being used or researched to circumvent the blockchain trilemma. Stay tuned for next episodes to learn about them.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 38 - Byzantine Fault Tolerance Aug 08, 2022

Show notes

Blockchains are basically peer to peer networks of nodes. The chain progresses when majority of the nodes or peers agree on the state of the blockchain and the validity of the next block. What happens when these nodes don’t agree or when they misbehave?

In a network of nodes, there could be a situation that some of the nodes are either offline, or under an attack, or just not functioning as expected. Also, these nodes are connected with each other using usual networking technology. It could also happen that the network doesn’t work properly between some of the nodes for some interval of time. All of these cases could result in a situation when one or more of the nodes don’t operate as per the rules. Such a situation is called a byzantine fault.

Blockchains, in general, can tolerate byzantine faults up to a certain extent. For example, a network can continue to produce blocks and function normally even if some of the nodes are byzantine. For example, the Bitcoin blockchain can continue to produce blocks even if 1/3 of the miners become byzantine.

The ability to tolerate byzantine faults comes from the consensus algorithms used by blockchain networks. Most of the well known consensus algorithms are designed with assumptions about potential byzantine faults and their impacts on the functioning of the network. Tolerating byzantine faults is one of the most basic requirements for public permission-less decentralized networks.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

Episode 37 - Lifecycle of a Blockchain Transaction Aug 02, 2022

Show notes

The user or DApp composes a transaction with information like input parameters, cryptographic signature, and some metadata about the blockchain network and a serialized data object is created out of it. All of this happens outside the blockchain using Wallets or DApps.

Transaction Submission

This serialized transaction data is then sent to one of the blockchain nodes using the RPC API.

Transaction Queue

Once the transaction is submitted to the node, some initial validation checks are run on it. If it is found valid, it is placed in the transaction queue of the node. At this time, it is also broadcasted to other nodes connected as peers to this node. Other nodes also run validations on the transaction.

Block Proposal

The transaction, along with other transactions, is then picked up by one of the nodes (assuming it has reached that node’s transaction queue) to be included in the next block they propose. Which node creates the next block is part of the consensus and block production algorithm. This could be different in different blockchain protocols. One thing that influences the inclusion of transactions in the block is the transaction fee paid by the user. The transactions are generally prioritized according to the fee.

Consensus

Once one of the nodes proposes a block, it is then propagated to other nodes in the network. All other nodes verify the block by executing all transactions included in it. Once majority of the nodes successfully verify the block, they reach consensus.

Commitment

Once the network agrees on the new block’s validity, all the nodes update their local state of the blockchain by executing all transaction in the block and committing that state. The next block would be built on top of this new state.

At this time, the effects of the transaction are visible because the state of the blockchain is updated across all nodes.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.blockshots.net

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