How Sharding Works To Scale Blockchain Ecosystems

23 Mar 2023

blockchain scalability

The emergence of blockchain technology has presented numerous possibilities in the world of decentralized systems. However, as the number of users and transactions increases, the scalability of the blockchain becomes a concern. Sharding is a technique that has been envisioned to solve this problem by dividing the blockchain into smaller partitions (shards), each contributing to decreased workloads, increased speeds, and better network availability, while in some use cases, shards could even be capable of processing transactions independently. This technique promises to improve the scalability of the blockchain and bring immeasurably more users on board, all without compromising on security or decentralization.

One of the key issues is the scalability of a blockchain, which refers to the ability of a network to manage and support a growing number of users without compromising its capabilities to successfully perform all tasks, serve each access point, and execute each transaction regardless of the overall scale of an ecosystem.

With the problem of lossless scalability being recognized as one of the key issues within all blockchain-based ecosystems, numerous solutions have been developed aimed at improving network capacity. These tend to ensure that newly-built systems can actually serve large numbers of users without any adverse effects or consequences in terms of network integrity or user experience.

Sharding is one of the first scalable concepts to be discussed as a solution for building and expanding large blockchain ecosystems. Here, we will explain sharding and how it can be strategically applied to scale up a blockchain-based ecosystem properly.


Sharding is a method of database partitioning that increases the number of transactions possible to perform per a given unit of time. This, in and of itself, significantly contributes to better scalability. Once applied over an entire blockchain-based ecosystem, it enables a network-wide transaction cap increase so that the entire network can process more requests and support more users.

As blockchain becomes mainstream, more and more people want or need to rely on it. This is where scalability is crucial because an increased number of users will inevitably slow down every network. Once the slowdown is noticeable, we’re facing a real problem.

Planning for this, one of the focal points of blockchain development becomes optimizing database workloads and network traffic. Hence sharding, along with some other methods, must be recognized as critically helpful in up-scaling large blockchains – not only on the front end (where users can experience speed, safety, and consistency) but also on the back end (where the service provider can comfortably commit to deliver reliably, with no service downtime due to network or database mishaps in cases of peak demand over a brief point in time).

This whole concept works best for dividing sizable yet unitary databases with large data sets. This is precisely why it can be seen as an ideal solution for successfully scaling up blockchain networks. So, say that Ethereum, for example (note: example not chosen at random), adopts sharding; this blockchain network will be split into many parts (shards), which are being kept and manipulated at various different points in the ecosystem.

If this idea is a bit confusing, we can look at it from a non-digital perspective: Imagine a major bookkeeping business operation dealing with many domestic and international clients, where because their firm is very reputable, there’s virtually no room for errors. Of course, there are as many professional bookkeepers employed as needed to keep up with the demand, and there are also auditors on top of them to keep every client’s financial standings under complete control. Now, say, for the sake of argument, that every client wants their records from the current day to be double-checked (for any reason) – all of them submitting a request at closely the same time, which happens to be just a few minutes before the end of a shift for the majority of your auditing team. No matter the size and determination of your workforce – this kind of situation can’t be resolved without some sort of delays because the entire team would be overwhelmed with so much work to be done over such a ridiculously short time that it’s just impossible to fulfill if we’d really need for an auditor to go over every action that every bookkeeper undertook for the entire working day.

Apart from a meager chance of something like that happening in real life, this is why no serious bookkeeping firm would keep unreliable employees who need to be micromanaged to do things right. You’ll much rather hire individuals likely to already know how to be efficient and properly contribute to the ability of your business to function equally as well, both when the workload is regular and when there’s some extra work “out of the blue.” In the particular case of performing audits: an auditor doesn’t really need to look at every single line in the books but instead takes a quick glance at some indicators and instantly knows and can affirm to the client that everything is fine. Or alternatively (but also instantly), they notice something’s out of the ordinary. Then they can either reliably assume what’s wrong and how to correct it or (very rarely-preferably never) take a deeper dive to examine the entries for possible errors. This level of confidence is ensured by proper workflows and the ability for multiple employees to contribute to the same task where it doesn’t matter who did something – the end result is always exactly the same, so it takes less time to pull out any record and instantly yet confidently claim that all is well, or if it isn’t: what piece of data is missing or wrong and where to find the correct values – at which nodes in the reporting log – and instantly fix the discrepancy).

When we translate this to blockchain scalability, you’ll get an idea of how sharding works out to scale blockchain ecosystems. Notice how we started using the term “nodes”? The same term is used for individual network points/blockchain links.

In essence, with sharding, there’s no need for Blockchain Nodes to keep an entire copy of a blockchain (just as no auditor needs to know every single entry of a bookkeeper that works under him) but rather store shards which are easier to manage, and this enables the entire network to perform a bigger number of actions without latency (just as the auditors can quickly report back that everything’s okay just by knowing which key indicators to look when double checking books and reports).

If each node kept the data of an entire distributed database (ledger), the network could experience latency increasing in a linear correlation to demand due to too much data needing to be served by these nodes over an entire network. As a result, nodes can’t multiply the necessary number of blocks nor transact timely, and this is where adverse effects are being exhibited.

Having in mind how sharding can improve node efficiency and overall network performance, this gives us a fresh look at the Blockchain Nodes, which we’ve recently covered in a previous 42 Blog Article.

The Sharding Method: How does it work?

Sharding splits data throughout an ecosystem to ensure that nodes won’t be bearing the entire burden of demand once transactions start ramping up. Instead, the nodes will keep track of clusters of shards, the number of which within a single node can vary widely.

To simplify: each shard can be viewed as a “mini-network” within the entire, larger blockchain network. Each shard should store only authentic and valid data, which implies that no single shard should store the same transactional data as any of the others within the same wider network ecosystem.

Once a blockchain is able to be dispersed in this manner, which ensures that these “mini-networks” are somewhat autonomous, quite a bit of energy is saved because, in this arrangement, there’s no need to allocate as many resources for extensive data generation (much of it needlessly repeating throughout the network). Moreover, thanks to sharding, the individual shards are dependent on one another since they store only partial data, rather meaningless unless paired up with all the other bits and pieces scattered throughout the blockchain.

The horizontal partitioning of databases may be used to perform sharding, and this can be done by dividing the rows of a database into sections. The rows, which are referred to as shards, are formulated according to their features.

Another important detail is that if a blockchain network adopts sharding as a way to scale its capacities up, the network won’t go through what is known as hard and soft forking in order to get there. In other words, sharding does not change blockchain protocols. Instead, each shard will use the original protocol.

The Types of Blockchain Sharding

Not all sharding methods work in the same fashion. We can point out three different strategies as bases for three different types of sharding:

Network Sharding

This method is the most straightforward, and it aims to improve network communication by optimizing how individual nodes talk to each other. It leads to synchronizing the shards at each transaction processing instance (but not any more frequently than that).

Transaction Sharding

As opposed to network sharding, this method looks to improve speeds by a specific way of handling how the transactions are being mapped to the shards (where they are intended to be processed). Despite being known to perform better than network sharding, transaction sharding comes with the downside of introducing a single point of failure, which is undesirable. However, when combined with other optimization or sharding strategies, the issue can be resolved.

This is why the future direction of implementing sharding techniques is ever more based on combining all types of sharding together, and herein lies the greatest challenge of them all: overcome the complexity of deploying all the different strategies to an ecosystem (either concurrently or as novel “hybrid” methods) and at the same time ensuring a cohesive protocol design, which not only fulfills the purpose of sharding to a full extent, but attains significant scalability without affecting service availability, fast dispatching and instant traceability, and last but not least – adaptability – because rigid solutions work only for a limited time…

State Sharding

Also known as direct sharding, in contrast to the previously described sharding mechanisms, where all nodes store the entire state of a network, this relies on each shard to maintain only a portion of said state. It comes with major technical challenges on its own. Still, the tremendous upside is that this is the most secure stand-alone approach, able to vastly increase transaction throughput rates, either by forcing every node to store lots of state data or each node to be a “supercomputer.”

The Significance

As we hope it is pretty clear by this point, sharding is vital to the future of blockchain because blockchain networks can only process a limited number of transactions simultaneously. 

Typically, every node in the blockchain will retain the whole history and process every transaction. At the moment, this is the heart and soul of decentralized networks. Because every node has its copy of the network’s full history, it is far more difficult for hostile actors to take control of the network and potentially undo or modify transactions. However, maintaining blockchain decentralization and security comes at the expense of the technology’s scalability.
Sharded blockchains achieve data compression by enabling nodes to avoid downloading the whole history of the blockchain or validating every transaction that passes through the network. This improves the performance and makes it possible for blockchains to scale up and handle a greater number of users.

With sharding, a blockchain can link additional nodes and store more extensive information, all without significantly slowing down transaction times. The increased network involvement and improved accessibility to users are two additional benefits that may be derived from sharding. As a result, more individuals will be able to participate in the network.

So, which blockchains are using sharding? Technically speaking – none of them do (yet). However, Ethereum and Cardano are among the leading candidates, putting resources into this concept and researching the possible solutions to implement this mode of scalability fully.If Ethereum adopts full sharding, it could potentially reduce the amount of hardware required to run a client, bringing viable server devices such as consumer PCs or even smartphones and other handheld devices into the mix. So the disruptive potential is obvious.

Currently, Ethereum sits very close to adopting sharding, while Cardano is still catching up, with the Hydra protocol being a focal point within the community for quite some time.
Updates will take time to happen… As laid out earlier, sharding isn’t equivalent to forking. Therefore, any significant changes to networks take time. Ethereum has set a goal to switch to full sharding by the end of this year. Still, despite determination, developers will likely face some major obstacles, whereby jumping over or going around will inevitably prolong the entire process. Cardano’s Hydra protocol has yet to be developed, and many challenges will be on that path as well, despite many strongly believing in its potential.

Is the current state of affairs being caused (at least in part) by sharding still being more of a concept than a tried and true tool, and should the early adopters focus on learning from mistakes at this stage? The answer to both of these questions is: Yes. One should always approach network-wide and paradigm-shifting changes to an ecosystem with great care.

Some Risks Do Exist

Despite obvious potential, sharding introduces new challenges, such as the single-shard takeover attack, adverse cross-shard communication, and the need for an abstraction layer to hide the shards.

In a situation where the workload is being distributed solely through shards, it leaves room for single-shard attacks. Once a hacker obtains control over a shard, they may try to change the code or inflict network-wide damage. Devs still being unable to patch this backdoor vulnerability can be viewed as the single leading cause of why full sharding is (still) just a concept (albeit a very good one).

However, where the above “pain-in-the-neck issues” have been addressed correctly, the potential of sharding to bring particular improvements and an overall increase in quality and sustainable boost of quantity in capacity to blockchain ecosystems is immense.

If sharding can truly be successfully implemented during 2023, it’s likely that all blockchains and the companies behind them will be investing bigger resources to perform research, which will help us determine the best way to utilize this data distribution method. How will this reflect on the possibilities of blockchain tech as we know it? This is still unknown, but let’s hope that time will (soon) tell us the answer(s).

To conclude…

The ability to successfully scale technologies and solutions has always been an engineering mastery for a select few. This predates the web and includes conventional applications. A saying in the wine-making business roughly says: “It’s a bigger challenge to produce 10,000,000 liters of a simply decent wine than [it is to produce] 10,000 liters of premium quality wine.” A similar problem is currently laid on top of all other challenges for anyone aiming to achieve mass market success through any disruptive initiatives, especially blockchain-based products & services.

As proven by ETH 2.0, any noticeable energy savings will do wonders for the overall value of a blockchain network. Furthermore, network workload can be more effectively delegated throughout a blockchain network if it’s firstly sharded and only then distributed as such. This makes a compelling argument for further optimization and expansion of sharding to improve blockchains across various use cases in the years to come.

At 42 Studio, we firmly believe that technical topics, such as this particular one, are vital to be understood for what they are and, if need be, even boiled down to practical examples so that everyone can grasp the possibilities. The markets are moving fast, and the best way that the web3 services can evolve from a promising industry to a massively adopted way of doing business is by being aware of the technologies and solutions, including their up and downsides, regardless of the sort of an ecosystem contributor you might be: a simple user, or an investor, a customer, stakeholder or service provider; bystander or a key player dictating the trends — everyone can benefit from diving a bit deeper into how these ecosystems actually work. This is why we will monitor further developments and report on breakthroughs.

To prepare for the future and expand your knowledge by reading more articles about blockchain technologies, be sure to check out our blog regularly.

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