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Exploring the Scalability Battle: NEAR vs. Ethereum – Shards vs. Layer-2 Solutions

Shards and Layer-2s: Unpacking NEAR and Ethereum’s Contrasting Approaches to Blockchain Scalability

Introduction

Blockchain scalability has been a hot topic in recent years, with Layer-2s (L2s) and sharding emerging as the two dominant approaches. Ethereum, one of the leading players in the crypto industry, has adopted rollup-centric L2s to scale its network. On the other hand, NEAR protocol has taken a different path, choosing to scale via sharding. Both strategies offer unique solutions to blockchain scalability but also present their distinctive challenges.

Ethereum’s Layer-2s: A Rollup-Centric Approach

Ethereum’s rollup-centric scaling strategy has garnered considerable attention in the crypto space. L2 protocols are built on top of existing blockchains to enhance scalability, throughput, and privacy. In a rollup, state transitions are executed off-chain from the Layer-1 (L1) and committed to the underlying L1 through state roots and transactional data. The driving philosophy behind rollups is that they can outperform the underlying L1 in terms of throughput due to decreased consensus overhead.

However, NEAR protocol publication NEARWEEK argues that the overall scaling achieved by rollups has been somewhat disappointing, barely surpassing what a single rollup can offer. Nevertheless, data from L2 analysis platform L2Beat shows increased L2 activity over the past year, with some Ethereum L2s closing in on Ethereum’s monthly transaction count and surpassing its average transactions per second (TPS) growth.

NEAR’s Shard-Centric Approach

NEAR Protocol has chosen to tackle scalability through sharding, which partitions the network into distinct segments built directly into the protocol. Each shard in NEAR’s architecture can be likened to an optimistic rollup in Ethereum’s approach. The key advantage of NEAR’s sharding approach lies in its composability, allowing applications on one shard to interact with applications on another shard natively.

NEAR’s sharding model also offers faster transaction finality, typically within two to three seconds, outperforming the extended finality times in the rollup universe. While NEAR Protocol does not list its real-time TPS on the block explorer, a CryptoSlate analysis shows an average TPS of roughly 5.7 transactions per second on July 4, aligning with the top five L2s on the Ethereum network. NEAR’s community envisions the protocol reaching 100,000 TPS in the future.

Contrasting Design Philosophies

The different scaling approaches adopted by Ethereum and NEAR reflect their contrasting design philosophies. Ethereum prioritizes resilience and maintains a simple L1 protocol design, while NEAR Protocol leans towards a simplified user experience and takes on additional protocol complexity to ensure a superior UX. NEAR aims to function as a Blockchain Operating System (BOS), providing a universal layer for navigating and discovering open web experiences across different blockchain ecosystems, including Ethereum Layer 2s.

Conclusion

Blockchain scalability remains a complex and crucial issue in the crypto world. As Ethereum’s rollup-centric L2s and NEAR’s sharding approach continue to evolve, it will be intriguing to see which approach proves to be the most effective in the long run. Both strategies offer unique solutions to blockchain scalability, and their success will depend on factors such as adoption, developer support, and user experience.

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