The following is an excerpt from the Sigma Network whitepaper which presents the team’s vision for the future performance and scalability standard for technology.
Performance and Scalability
Since their inception, platforms have struggled to scale to network demand and have continued to contend with scaling and performance issues. The more we desire to use platforms, the less we are able to. This is as much true for and — the largest and most popular platforms — as it is for the newer projects. improved upon ’s throughput — to process 20 transactions per second (TPS) to ’s maximum of 7 — yet remains far behind readiness for mass market usability.
In contrast, the VISA network processes 24,000 transactions per second with a stated capacity of above 65,000 transactions per second (Visa Factsheet 2017). What is clear is that incremental improvements will not deliver the TPS capability required; new solutions that re-address how technology handles transactions are necessary. Additional performance challenges exist in latency, cost and time to compute, and storage requirements. These are universal, and must be addressed with a universally applicable chain agnostic solution.
To date, the majority of performance solutions have operated within the limitations of Layer-1: the native . The solutions have sought to re-address how transactions are processed (in parallel through sharding, for example) or how the achieves consensus (PoS versus PoW).
Layer-1 scaling solutions have helped advance technology in increments, but have yet to provide the transition from concept to use case that is required in a distributed . The industry requires a solution that can bring us to the level of performance required when moving legacy systems into the ecosystem, but which does not compromise the security or decentralization benefits of the .
Cost
are the closest the has come to a use case, as a new payment currency and of digital value. A cup of coffee can be purchased with , but rarely is: the experience of spending cannot justify the cost. Difference for differences sake will not incentivize users or merchants.
The cost of using the network is prohibitive and incongruent with how consumers make purchases. Increasingly, everyday purchases rely on micro transactions — low value, high volume — that cannot be efficiently or practically handled on the or networks. The cost to merchants is too high and the value of the exchanged currency too volatile. And this does not consider the time it takes to execute the payment, which is equally incongruent with our expectation for instant, real-time exchanges. The below chart depicts the median transaction fees in USD on the network and shows a dramatic increase over recent months as a result of the increase in transaction volumes.
This exemplifies that current platforms are ill-suited for real-life practical applications involving significant transaction volumes with low value. Whilst the transaction fees constitute a large part of the cost of using a platform, there are other factors to be considered. In his treatise on The True Cost of Transactions (2017), Erik Voorhees defines this as a function of fees (F), time to determine these fees (T) and risk of uncertainty (Ru):
Cost = F + T + Ru
When is used to execute a value transaction, the costs incurred are not just the transaction fees for the miners but also the time and uncertainty. With regards to uncertainty, (near) instant finality is desirable as depending on the application, one cannot wait for 20 confirmations to be completed.
Blockchains currently face a scalability cost problem. The average transactions per day for in September 2015 was 5,794. This jumped to an average of over 534,000 transactions per day in Q1 2019. Transactions per day peaked at over 1,349,000 in January 2018 (Etherscan). A similar increase in transactions over this period is shown across a number of other platforms. This resulted in an increase in transaction fees and average confirmation times. In December 2017 had over 200,000 transactions queued in the mempool.
Use Cases
Each existing technical limitation compounds ’s biggest challenge: how to emerge from an exciting concept to a usable, dependable infrastructure, with the potential to radically change how individuals connect, interact, and transact. was conceived through a thought provoking concept — blueprints to a possible future underpinned by a belief in disintermediation and decentralization — than as a ready made system or conduit for business. It must continually be innovated upon, through new approaches, applications, and points-of-access, if it is to become the underlying technology for the future digital economy.
Mass-market is unlikely to be realized until distributed technology is able to match the experience and capabilities — scalability, throughput, cost, and reliability — of existing solutions, with the accessibility necessary for widespread integration and use.
Published at Sun, 26 May 2019 15:10:16 +0000
