Introduction 

Public blockchains are mechanisms through which networks can maintain decentralized consensus over a shared state. Typically, this state holds, among other data, a payment system. The stake held by participants in the resulting economy works as their incentive for making the state widely available to others and for rejecting invalid transactions. In this virtuous cycle, the payment system is built on top of the decentralized consensus, which only functions due to incentives created by the payment system itself. Both the payment system and the consensus can then be used for other purposes. 

As new applications for blockchain technology are envisioned, the demands on the underlying infrastructure are constantly increasing. At the moment, the two major obstacles to widespread adoption of blockchain technology are its poor scalability and lack of a solid development environment. The main contribution of Cartesi to the blockchain ecosystem is overcoming both these issues. Scalability Currently deployed consensus mechanisms are based on full redundancy [Nakamoto 2009; Wood 2018]. They require every transaction to be stored permanently and to be validated by every participant. 

This inefficiency is the key limiting factor to the growth of the transaction rate, the amount of data involved, and the intensity of computations within transactions. High transaction costs and increased latency have become a barrier to many innovative applications that would otherwise benefit from the flexibility that smart contracts bring to the blockchain.

Attempts to improve blockchain scalability can be divided into layer 1 and layer 2 solutions. Layer 1 scalability solutions change the underlying blockchain infrastructure itself. Examples include the optimization of block sizes, sharding, and Delegated Proof of Stake (DPoS). Because they operate at the infrastructure level, these solutions are burdened by the requirement of preserving global consensus. Certain aspects of the state, such as the payment system, are of critical importance to all parties and therefore require global consensus. Otherwise, for most interactions mediated by the blockchain, it is perfectly safe to limit access and verification responsibility to the few parties that can potentially be affected. The blockchain can then be used to provide finality and to guarantee local consensus in the rare occasions where a dispute arises between these parties. In other words, global consensus is a precious resource that should be used with parsimony. In recognition of this fact, layer-2 scalability solutions such as plasma, side chains, TrueBit, or state channels move as much data and computation as possible off-chain. Layer-1 and 2 scalability solutions are discussed at some depth in section 2.

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Author (Ar rahman)

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