How Does Sharding Conceptually Increase the Transaction Throughput of a Blockchain?
Sharding involves splitting the blockchain's state and history into smaller, manageable partitions called "shards." Each shard processes its own set of transactions and maintains its own state. By parallelizing transaction processing across multiple shards, the network can handle a much greater volume of transactions simultaneously.
This effectively increases the total network capacity without requiring every node to process every transaction.
Glossar
Transaction Processing
Ledger ⎊ The core of transaction processing within cryptocurrency, options, and derivatives hinges on the immutable record-keeping provided by a distributed or centralized ledger.
Transaction Throughput
Capacity ⎊ The transaction throughput, within cryptocurrency, options, and derivatives markets, fundamentally represents the rate at which transactions or orders can be processed and settled within a given timeframe, typically measured as transactions per second (TPS).
Network Capacity
Throughput ⎊ This metric quantifies the maximum number of transactions or data packets a blockchain network can process within a defined time interval, directly impacting the viability of high-frequency trading strategies.
Sharding
Fragmentation ⎊ Sharding, within cryptocurrency networks, represents a database partitioning technique designed to enhance transaction throughput and scalability by dividing the blockchain into smaller, more manageable segments known as shards.