Tradeoff Analysis and Sharding of Blockchain Technology

Abstract: Blockchain is a secured, shared, and distributed ledger system, which can record and track resources without the requirement for a centrally trusted authority. In addition to cryptocurrency, blockchain can be used for supply chain, logistics, healthcare, energy industries, and other financial services. However, blockchain technology faces several challenges including energy consumption, security risks, governance, performance and scalability. Hence, The government and private sectors are yet to consider blockchain-based solutions as a sustainable approach to building their business models. Addressing these challenges will be critical to enabling blockchain technology to reach its full potential and become a truly transformative force in various industries. Scalability is a major challenge in blockchain, as the process of reaching consensus requires either significant computational power or complex repetitive communications among the nodes. This issue could be addressed with blockchain sharding. Sharding is a technique  to improve scalability by dividing the network into smaller parts called shards. Sharding allows blockchain networks to process more transactions per second (TPS) by distributing the workload across different nodes in the network. While sharding can improve the scalability of blockchain networks, it introduces some complexity and requires careful design to ensure security and decentralization. Some of the challenges of sharding include maintaining consistency between shards, preventing double-spending.The scope of this thesis is to investigate the opportunities, challenges, and tradeoffs of various blockchain technologies. We provide a tradeoff analysis considering technical properties such as the performance and important architectural/societal considerations about blockchain systems, based on the governance model and quality attributes. We also try to address the scalability issues regarding traditional blockchain solutions and identify the possibilities of sharding solutions to improve the performance and scalability of blockchain. There are six major contributions. First, we conduct a literature survey of blockchain from the perspective of applications, challenges, and opportunities. It presents some tradeoffs of blockchain, a comparison among different consensus mechanisms, and discusses challenges, including scalability, privacy, interoperability, energy consumption, and regulatory issues. Second, we evaluate the mobility gap for Electric vehicle (EV) charging transactions by leveraging blockchain-based solutions.  We also present a proof of concept using the Hyperledger consortium platform for the evaluation of the technical feasibility of the proposed approach. Third, we present a quantitative performance and scalability analysis of some popular private blockchain platforms, including Ethereum Quorum, Corda, and Hyperledger Fabric. Fourth, we propose a taxonomy guideline that provides critical insights for determining a suitable blockchain platform. Fifth, we propose a guideline and applicability analysis framework (AAF) to determine whether an application needs a blockchain solution or not. This framework is designed to ingest detailed user requirements to perform a weighted evaluation that is built on mathematical constructs to determine the scenario in which a blockchain-based solution is appropriate. Finally, we present a review of recent sharding technologies, including Polkadot, Ethereum Casper, and Cardano Hydra to discuss the performance challenges of blockchains and provide important insights on the tradeoffs regarding blockchain trilemma: decentralization, security and scalability (DSS).