QuarkChain – Solving the blockchain trilemma (ICO tech review, 2018)

Blockchain is booming and has developed into the buzzword of 2010’s technologies together with artificial intelligence and virtual reality. However, first and even second generation blockchains such as Bitcoin and Ethereum feature only limited scalability. Recent incidences such as the ‘cryptokitties’ congestion [1], which brought Ethereum to its knees and skyrocketed transaction fees of Bitcoin in late December [2], have sparked a heated debate about the scalability issues of current blockchain platforms. Concurrently, a wave of third generation blockchains were developed that increase transaction throughput by employing a plethora of innovative methods such as smaller block sizes, novel consensus algorithms (e.g. proof of stake) or off-chain scaling solutions. Nevertheless, most of those approaches result in an unbalanced tradeoff between the three major problems tackled by blockchain technologies: scalability, security and decentralization. In short: the blockchain trilemma.

While off-chain scaling methods are currently implemented into both Bitcoin (Lightning Network) and Ethereum (Plasma), the core protocols remain slow and rather inflexible. Moreover, most blockchains are somewhat centralized due to factors such as the geographic clustering of huge mining pools in regions of cheap electricity or the formation of delegate cartels in delegated proof of stake systems [3]. In sum, while there are many promising advancements in development, no blockchain has found the ultimate solution that optimizes the blockchain trilemma. QuarkChain may change that.

To appreciate the full potential of this technology and investment opportunity, we need to dive into some of the technical aspects.
In this review, I am going to present a concise analysis of the technological concept behind QuarkChain, which targets blockchain enthusiasts and crypto investors who want to understand how QuarkChain may be a game changer. Instead of throwing around imaginative numbers of potential investment returns, I want to emphasize how this technology has the power to truly disrupt the current systems by providing up to 1.7 Mio tps. And yes, once fully unrolled, this technology definitely has the potential for very high investment returns.

QuarkChain is introducing a disruptive new technology which combines sharding with a second root layer in order to increase the network capacity, flexibility and decentralization.

Figure 1: Quarkchain aims to optimize the blockchain trilemma (scalability, security and decentralization) by employing an innovative blockchain protocol [source: official whitepaper].

What is sharding?
The term sharding is used in information technology to refer to the process of portioning a large database into smaller parts in order to increase speed and manageability. Essentially, a blockchain is nothing else but a large, distributed database, also called a ‘ledger’ for which sharding can be applied. In the case of the blockchain, database entries are transactions. In contrast to its centralized counterpart, transactions are not verified by one source (the maintainer of the database, e.g. the bank) but have to be validated by the consensus across all participants of the system. Now imagine, if each node has to validate every transaction the system would crash, since nodes would have to be up and running 24/7 and would need incredible bandwith and storage space. Therefore, the block validation process is performed by a selection of high-performance nodes, the miners. However, under conditions of high transaction traffic between thousands to millions of nodes, achieving consensus between those miners is still inefficient. And this is where sharding comes into action. Instead of validating all transactions during a given time-period (block time), the blockchain is partitioned into clusters (or shards) where each miner is only responsible for a subset of nodes and their respective transactions.

One potential pitfall of sharding in a decentralized system is the danger of malicious shards which process invalid transactions. QuarkChain tackles this issue by adding another validation layer – the rootchain – which validates the blocks of the shards. By enabling this second layer control mechanism which harbors a significant portion of the hash power, increases the network security and still enables high-performance transaction validation. Conceptually, one can describe this set up as an interconnection of multiple blockchains, where each shard is one blockchain that is connected to the rootchain. If all shards would be run as full nodes like in Bitcoin or Ethereum, the network could achieve comparable safety levels to conventional blockchains but would feature the same throughput limitations and promote centralization (selection for high-performance computer system that are only accessible to powerful parties). The implementation of such an adjustable double-layer system allows to find the optimal trade-off between scalability and security while maximizing decentralization. Remarkably, QuarkChain further promotes decentralization by allowing multiple honest nodes within a cluster to run as a super-full node. In combination with a highly optimized game-theoretical incentive framework, the QuarkChain protocol could bring decentralization to the next level. In its core, QuarkChain can be seen as a structured directed acyclic graph (DAG) which combines the strengths of both blockchains (Bitcoin, Ethereum) and DAGs (IOTA, NANO).

Figure 2: System architecture. QuarkChain combines mining on rootchain and shard layer into a collaborative mining system, which increases throughput and security [source: official whitepaper].

Recently, a new blockchain solution called Ziliqa has attracted a lot of attention for its employment of sharding. However, in contrast to QuarkChain, the Ziliqa platform is not providing smart contracts and scalable cross-shard transactions (linear relationship with number of shards). Moreover, the QuarkChain team is developing a SmartWallet, which will handle the account management for cross-shard transactions in a simple and intuitive fashion. As of today, QuarkChain represents the most advanced sharding protocol which has to potential to outcompete the entire blockchain space in respect to the tradeoff between scalability, security and decentralization.

As with all technologies, there are three major bottlenecks in the QuarkChain-system. The validation of transactions requires high CPU and network bandwidth, which are both limiting factors for transaction speed. However, it is reasonable to assume that technological advances will lead to an increase of both in the coming years. Besides these external factors, the block size of the root chain is limited and with a given block time of 150 s, the maximal network capacity lays around 1.7 Mio transactions per second (tps). Nevertheless, in comparison to current high-speed systems such as AliPay which achieved a peak of 200,000+ tps [4], the QuarkChain platform is still more than competitive.

In conclusion, QuarkChain represents one of the most powerful (if not the most powerful) high-throughput blockchain that aims to achieve millions of on-chain transactions per second, outcompeting even the fastest centralized transaction system (AliPay). Given these incredible metrics and the strong team of developers and advisors who are building the platform, QuarkChain has the potential to disrupt the current shortcomings of blockchain technologies.

For more information concerning the technology, team and token economy refer to:

Official Website: https://quarkchain.io/
Whitepaper: https://quarkchain.io/QUARK%20CHAIN%20Public%20Version%200.3.4.pdf

[1] https://hackernoon.com/how-crypto-kitties-disrupted-the-ethereum-network-845c22aa1e6e
[2] https://bitinfocharts.com/comparison/bitcoin-transactionfees.html
[3] https://themerkle.com/study-shows-bitcoin-and-ethereum-are-far-too-centralized-right-now/
[4] https://twitter.com/alipay/status/929123909970153472?lang=en